Crude Edges Lower, Weighed By Economic Concerns
Oil futures edged lower Monday after spending most of the session down, weighed by a weaker stock market and fresh concerns about Europe's economic outlook.
Light, sweet crude for June delivery settled 6 cents, or 0.1%, lower at $104.87 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 36 cents, or 0.3%, lower at $119.47 a barrel.
Futures fell as much as 1% earlier in the day after Spain disclosed it was officially in a recession after its economy contracted 0.3% during the first three months of the year.
The news underscored the economic weakness that continues to grip the euro zone, despite strict austerity measures aimed at controlling its sovereign-debt crisis.
"There's nothing bullish about anything from a macroeconomic point of view," said Dominick Chirichella, analyst at the Energy Management Institute in New York. "Everything continues to point to a global economy that's slowing, which means less oil demand."
Spain has been among the countries hardest hit by the currency union's sovereign debt crisis, which has crimped economic growth across the region and slowed oil demand.
The country's banking sector suffered a widespread credit-rating cut on Monday. Last week, Standard & Poor's cut Spain's debt rating by two notches.
Futures were also weighed down by a selloff in the equities market, also hit by news of Spain's recession and weaker U.S. economic data. Oil traders often see the stock market as a barometer of broader economic strength.
The Standard & Poor's 500 Index recently fell 0.5% to 1395.5.
Later this week, market participants will turn their attention to Friday's closely watched U.S. nonfarm payrolls report for April for insights into the employment health of the world's biggest oil consumer. The March report saw a slowdown in U.S. hiring, and if the trend continues it could further dampen oil prices.
"With these economic worries, I don't think we're out of the woods," said Rich Rafferty, oil broker at Penson Futures in New York.
Benchmark U.S. crude has traded in a narrow band between $100 and $105 a barrel nearly all month, caught between the competing forces of sluggish global growth and the possibility of conflict with Iran disrupting supplies.
The latter worry has eased somewhat in recent weeks, following this month's summit in Istanbul between Iran and several developed countries over Tehran's nuclear program. Although no formal agreement was reached, the parties agreed to continue negotiations next month in Baghdad, a sign that an imminent supply disruption or military escalation is less likely.
Front-month May reformulated gasoline blendstock, or RBOB, settled 2.18 cents, or 0.7%, lower at $3.1844 a gallon. May heating oil settled 0.27 cent, or 0.1%, higher at $3.1834 a gallon. Both contracts expired Monday.
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