Friday, May 14, 2010

Crude Oil Falls to Three Month Low on Concern European Crisis May Slow Recovery

Crude oil fell to a three month low in New York on concern that Europe’s sovereign debt crisis will reduce global economic growth and fuel consumption. Oil dropped for a fourth day and the euro traded near a 17 month low against the dollar as the Spanish daily El Pais reported that French President Nicolas Sarkozy threatened to pull out of the common currency. Supplies at Cushing, Oklahoma, where New York traded West Texas Intermediate oil is delivered, rose to a record last week, according to the Energy Department.

“The European debt worries are hitting a lot of markets,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “This together with rising inventories, especially at Cushing, will continue to weigh on oil.” Crude oil for June delivery fell $1.15, or 1.6 percent, to $73.25 a barrel at 10:06 a.m. on the New York Mercantile Exchange. Futures touched $72.72, the lowest level since Feb. 12. Oil is down 2.5 percent this week.

Oil has dropped 16 percent on the Nymex since it reached $87.15 a barrel on May 3, a 19 month high, as the euro weakened against the dollar. The euro traded at $1.2434, down 0.8 percent from $1.2535 yesterday. The euro breached $1.25 for the first time since March 2009 and touched the lowest level since Nov. 13, 2008. Portugal announced austerity measures yesterday, a day after Spain proposed to reduce its deficit, spurring concern that fiscal tightening in the region will undermine economic growth and derail the global recovery.....Read the entire article.

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