MNeagle
5th May 2010, 08:46 AM
By Mark Shenk
May 5 (Bloomberg) -- Crude oil fell below $80 a barrel in New York as the euro dropped against the dollar on concern that Greece’s bailout may have to be extended to other indebted nations.
Oil slipped as much as 4.3 percent as the common currency tumbled to its lowest level against the dollar since March 2009, curbing the appeal of commodities to investors. An Energy Department report today will probably show that U.S. stockpiles of crude rose 1 million barrels last week, based on the median of estimates from 16 analysts surveyed by Bloomberg News.
“The Greek crisis appears to be spreading, which is raising concerns about the economic recovery,†said Phil Flynn, vice president of research at PFGBest in Chicago. “Prices have been supported on expectations that demand will climb as economies rebound. Now the focus may return to the market fundamentals and the huge oversupply of oil.â€
Crude oil for June delivery fell $3.15, or 3.8 percent, to $79.59 a barrel at 9:34 a.m. on the New York Mercantile Exchange. Futures touched $79.15, the lowest level since March 22. Prices slumped 7.7 percent yesterday and today, the biggest two-day drop since September.
Brent oil for June settlement declined $3.05, or 3.6 percent, to $82.62 a barrel on the London-based ICE Futures Europe exchange.
European Central Bank council member Axel Weber said today there is a threat of “grave contagion effects†in the euro area. The euro fell 1.3 percent to $1.2825, down from $1.2987 yesterday. The 16-nation currency touched $1.2804, the weakest level since March 12, 2009.
Collapsing Euro
“The oil market is linked to the financial markets, which are much bigger,†said Sarah Emerson, managing director of Energy Security Analysis Inc. in Wakefield, Massachusetts. “The euro is collapsing relative to the dollar on concern that the Greek debt crisis is spreading. As long as this occurs there will be downward pressure on oil.â€
Stocks fell around the globe, erasing the 2010 gain for the MSCI World Index, on the Greek fiscal crisis. The MSCI gauge of equities in 23 developed nations declined 1.6 percent, leaving it down 1.3 percent for the year.
“The market’s showing anxiety about the problems in the eurozone, and whether the spending cuts and tax rises many countries there will have to embrace may harm the economic recovery,†said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “Continued high U.S. stocks levels are putting a damper on prices.â€
Inventory Data
The Energy Department is scheduled to release its weekly inventory report at 10:30 a.m. in Washington. The American Petroleum Institute reported yesterday that U.S. crude inventories gained 2.95 million barrels last week.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey. Oil-supply totals from the API and DOE moved in the same direction 75 percent of the time over the past four years, according to data compiled by Bloomberg.
http://www.bloomberg.com/apps/news?pid=20601087&sid=agFWdiKP5ei0&pos=7
May 5 (Bloomberg) -- Crude oil fell below $80 a barrel in New York as the euro dropped against the dollar on concern that Greece’s bailout may have to be extended to other indebted nations.
Oil slipped as much as 4.3 percent as the common currency tumbled to its lowest level against the dollar since March 2009, curbing the appeal of commodities to investors. An Energy Department report today will probably show that U.S. stockpiles of crude rose 1 million barrels last week, based on the median of estimates from 16 analysts surveyed by Bloomberg News.
“The Greek crisis appears to be spreading, which is raising concerns about the economic recovery,†said Phil Flynn, vice president of research at PFGBest in Chicago. “Prices have been supported on expectations that demand will climb as economies rebound. Now the focus may return to the market fundamentals and the huge oversupply of oil.â€
Crude oil for June delivery fell $3.15, or 3.8 percent, to $79.59 a barrel at 9:34 a.m. on the New York Mercantile Exchange. Futures touched $79.15, the lowest level since March 22. Prices slumped 7.7 percent yesterday and today, the biggest two-day drop since September.
Brent oil for June settlement declined $3.05, or 3.6 percent, to $82.62 a barrel on the London-based ICE Futures Europe exchange.
European Central Bank council member Axel Weber said today there is a threat of “grave contagion effects†in the euro area. The euro fell 1.3 percent to $1.2825, down from $1.2987 yesterday. The 16-nation currency touched $1.2804, the weakest level since March 12, 2009.
Collapsing Euro
“The oil market is linked to the financial markets, which are much bigger,†said Sarah Emerson, managing director of Energy Security Analysis Inc. in Wakefield, Massachusetts. “The euro is collapsing relative to the dollar on concern that the Greek debt crisis is spreading. As long as this occurs there will be downward pressure on oil.â€
Stocks fell around the globe, erasing the 2010 gain for the MSCI World Index, on the Greek fiscal crisis. The MSCI gauge of equities in 23 developed nations declined 1.6 percent, leaving it down 1.3 percent for the year.
“The market’s showing anxiety about the problems in the eurozone, and whether the spending cuts and tax rises many countries there will have to embrace may harm the economic recovery,†said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “Continued high U.S. stocks levels are putting a damper on prices.â€
Inventory Data
The Energy Department is scheduled to release its weekly inventory report at 10:30 a.m. in Washington. The American Petroleum Institute reported yesterday that U.S. crude inventories gained 2.95 million barrels last week.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey. Oil-supply totals from the API and DOE moved in the same direction 75 percent of the time over the past four years, according to data compiled by Bloomberg.
http://www.bloomberg.com/apps/news?pid=20601087&sid=agFWdiKP5ei0&pos=7