Commodity Corner: Oil Drops on Weak Economic Data
Oil prices continued to fall Tuesday on disappointing economic data and concerns about the euro's stability.
Light, sweet crude futures dropped $1.34, settling at $96.03 a barrel Tuesday. According to the U.S. Commerce Department, housing starts declined by 10.6 percent in April to 523,000. Additionally, the Federal Reserve reported a 0.4 percent decrease in April's industrial production—the first drop in 10 months. A decrease in industrial production represents a weak economic situation, signifying a lower demand for goods including crude oil.
Earlier in the day, the dollar received a boost as concern escalated on the instability of the euro. The euro retreated from earlier losses but remained vulnerable on anticipation that Greece may restructure its debt.
The intraday range for June crude was $95.02 to $97.81.
Likewise, gasoline futures also fell again Tuesday. Traders continued to sell Tuesday as fears eased over the effect of the Lower Mississippi River flooding on the refinery corridor from Baton Rouge to New Orleans. Front-month gasoline traded between $2.84 and $2.95 before settling a penny lower at $2.92 a gallon.
A report that industrial production declined in April caused natural gas prices to decrease for the first time in four days. Analysts worry that the data may cause the demand for fuel to soften. Natural gas futures settled at $4.25 per thousand cubic feet, down seven cents from Monday. Prices peaked at $4.33 and bottomed out at $4.16 Tuesday.