Futures dropped as much as 0.7 percent, extending this month’s decline to 2.9 percent. Spain’s economy contracted in the first quarter, sending the country into its second recession since 2009, the National Statistics Institute said. The country’s ministers will hold a press conference today on measures to cut its budget deficit. Equities dropped.
“Brent oil started the week in negative territory, amid persistent concerns about a slowdown in the oil demand, following poor economic data from Spain that showed the Spanish economy is sliding back into recession,” Myrto Sokou, an analyst at Sucden Financial Ltd. in London, said by e-mail. “The situation in the euro zone looks very vulnerable.”
Brent for June settlement was at $119.27 a barrel, down 56 cents, on the ICE Futures Europe exchange in London as of 12:48 p.m. local time. Prices are poised for their first monthly drop since December. The European benchmark contract’s front-month premium to West Texas Intermediate was at $15.01, compared with $14.90 on April 27.
Crude for June delivery was at $104.31 a barrel, down 62 cents, on the New York Mercantile Exchange. Prices rebounded 1.3 percent this month after a 3.8 percent decline in March.
Brent dropped to a 10-week low of $116.70 a barrel this month, partly because of signs of easing tensions between Iran and Western nations. The first international talks on Iran’s nuclear program in more than a year yielded an agreement to reconvene next month and were called “constructive” by the two lead negotiators from Iran and the European Union.
“The market has a shaky feel to it, with Iran now looking less hawkish and the euro-zone debt crisis rearing its head once again,” analysts at KBC Energy Economics, a consultant based in Walton-on-Thames, England, said in an e-mailed note.
Hedge funds and other money managers reduced bullish bets on Brent crude by 8,968 contracts in the week ended April 24, according to data from ICE Futures Europe.
Oil demand may fall in the second half of the year, pushing up global stockpiles, Ole Hansen, a senior manager of trading advisory at Saxo Bank A/S, said by phone from Copenhagen. U.S. crude inventories rose for the past five weeks, according to the Energy Department.
Money managers, including hedge funds, commodity pools and commodity trading advisers, cut bullish oil wagers by 2,878, or 1.4 percent, to 196,426 futures and options combined in the seven days ended April 24, according to the Commodity Futures Trading Commission’s Commitments of Traders report on April 27.
In gasoline, hedge funds cut bullish bets by the most in four months as demand dropped and refiners negotiated to save two East Coast plants from the scrap heap, allaying concern of a supply shortfall.
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