Tags: oil | us | eurozone | economic

Oil Tumbles on Weak US, Eurozone Economic Reports

Tuesday, 30 April 2013 05:56 PM

World oil prices fell 1.4 percent on Tuesday, posting their biggest daily decline in almost two weeks after U.S. data showed Midwest business activity contracted in April and a European report showed record unemployment.

A survey showing a rebound in supply from OPEC producers in April further pressured prices a day after they had rallied up to $104. In mid-April, Brent crude oil hit a nine-month low below $97, and ended down more than 7 percent for the month, its biggest monthly decline in 11 months.

The spread

Brent fell $1.44 to settle at $102.37 a barrel after briefly going up to $104. U.S. crude settled $1.04 lower at $93.46 a barrel, ending the month down 4 percent.

Both extended losses in post-settlement trading, with Brent reaching a low of $101.48 and crude falling to $92.86.

Prices were little moved by data from the American Petroleum Institute showing U.S. crude stocks rose by 5.2 million barrels, much larger than a forecast 1 million barrel build.

The more closely-watched report from EIA will be released Wednesday morning at 10:30 Eastern time.

The Brent/WTI spread fell by as much as 80 cents to a low of $8.51 in post-settlement trading, down from more than $23 in February 2013 as Cushing oil inventories drained.

On Tuesday, the spread was volatile, whipsawed by news that the Buzzard oil field in the North Sea would resume production within 24 hours of an unexpected Monday night shutdown.

The spread briefly widened at mid-afternoon U.S. time after industry group Genscape reported a drop in pumping volume along a segment of the 590,000-barrel-per-day Keystone pipeline from Canada to the United States. But operator TransCanada Corp later said that the line had already been restarted after brief maintenance on a piece of electrical equipment.

"There's a lot of volatility in the spread. We might have seen some people who timed the spread correctly looking to take profits," said Gene McGillian of Tradition Energy in Stamford, Connecticut.



Business activity in the U.S. Midwest unexpectedly contracted in April to its lowest level since September 2009, according to the ISM-Chicago Business survey, which followed weaker-than expected U.S. first-quarter growth data released last week.

"This morning the motivating factor is the less-than-stellar Chicago purchasing report. This is industrial, it's the Midwest. Clearly with that report coming out at less than 50, then down went crude," said Dennis Gartman, editor of The Gartman Letter.

Oil traders are looking ahead to see if economic stimulus measures are forthcoming from U.S. and European central banks.

At the U.S. Federal Reserve meeting on Tuesday and Wednesday, policy makers are expected to affirm the central bank's bond-buying plan. The market will also watch this week for a rate cut form the European Central Bank.

Ongoing stimulus could spark investor buying interest, but it "may not revive physical demand for actual gasoline and diesel fuel," noted Tim Evans, energy analyst at Citi Futures Perspective in New York.

In the U.S., the world's top oil consumer, economic growth was lackluster in the first quarter, raising fears the economy could struggle to cope with Washington's austerity drive.



European data on Tuesday showed inflation in the euro zone has fallen to a three-year low and unemployment has hit a record of 12.1 percent.

German retail sales fell for the second month running in March, and Spain's economy shrank for the seventh straight quarter from January to March, preliminary data showed. Spain's recession looks set to last into next year.

"In the last couple of weeks economic data all over the world has capped the upside, and until data shows a strong rebound, there's little chance for a bounce back," said Andy Sommer, analyst at EGL in Dietikon, Switzerland.

There was bearish news on the supply side of the equation too, with supply from the Organization of the Petroleum Exporting Countries set to average 30.46 million barrels per day (bpd), up from 30.18 million bpd in March, according to a Reuters survey.

In a speech on Tuesday, Saudi Arabia's energy minister said the kingdom does not plan to expand its oil production capacity to 15 million barrels per day, dispelling a suggestion put forth by a member of his country's royal family.

© 2018 Thomson/Reuters. All rights reserved.

1Like our page
World oil prices fell 1.4 percent on Tuesday, posting their biggest daily decline in almost two weeks after U.S. data showed Midwest business activity contracted in April and a European report showed record unemployment.
Tuesday, 30 April 2013 05:56 PM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved