Oil Falls From Four-Week High as Spain Cut Renews Demand Concern
Oil fell from the highest level in almost four weeks in New York, trimming a second weekly gain, after a cut in Spain’s credit rating renewed concern that Europe’s economy may falter and curb fuel demand.
Futures slipped as much as 0.6 percent after New York-based Standard & Poor’s reduced Spain’s rating to BBB+ from A and said the nation may have to provide fiscal support to the banking sector as the economy contracts. Prices also dropped after reaching technical resistance. West Texas Intermediate crude may decline next week after economic confidence in the euro-region fell and more Americans than forecast filed applications for unemployment benefits, a Bloomberg News survey showed.
“It’s quite clear in West Texas terms that we’ve moved back into the trading range between $103.50 and $108.50, and at this stage we’re not looking at any factors over the next few weeks that are likely to drive us out of there,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “Europe is an important economy to the globe but we don’t see it as a major engine of growth.”
Crude for June delivery slid as much as 62 cents to $103.93 a barrel in electronic trading on the New York Mercantile Exchange. It was at $103.96 at 2:25 p.m. Singapore time. The contract rose 43 cents yesterday to $104.55, the highest close since April 2. Prices are up 0.9 percent this week and 5.2 percent higher this year.
Brent oil for June settlement on the London-based ICE Futures Europe exchange declined 65 cents, or 0.5 percent, to $119.27 a barrel. The European benchmark contract’s premium to West Texas futures increased for a third day to $15.45, from $15.37 yesterday.
Oil in New York has technical resistance along its 50-day moving average, according to data compiled by Bloomberg. Futures halted yesterday’s advance near this indicator, which is at $105.10 a barrel today. Sell orders tend to be clustered near chart-resistance levels.
Prices may decrease next week on lower euro-region confidence and the unemployment report yesterday, a Bloomberg survey showed. Sixteen of 37 analysts and traders surveyed forecast oil will drop through May 4. Twelve respondents predicted futures will rise and nine estimated there will be little change.
U.S. jobless claims fell to 388,000 last week from a revised 389,000 the prior week, the highest since early January, according to Labor Department data yesterday. An index of executive and consumer sentiment in the 17-nation euro area slid to 92.8 from a revised 94.5 in March, a report by the European Commission in Brussels showed.
The countries using the euro accounted for about 12 percent of global oil demand in 2010, according to BP Plc (BP/)’s Statistical Review of World Energy. The U.S. was the biggest crude user, responsible for 21 percent of world consumption.
Libya plans to surpass its pre-rebellion crude output by about June and will soon start its largest refinery that was damaged during fighting last year, Nuri Berruien, chairman of state-run National Oil Corp. said yesterday. Production is expected to climb above 1.6 million barrels a day, he said.
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