Tuesday, June 1, 2010

Crude Oil Falls for Third Day on Concern Slower Growth to Cut Fuel Demand

Oil fell for a third day as Chinese equities dropped, highlighting concerns about flagging fuel demand in the world’s second largest crude user, and as the euro fell against the dollar, limiting the appeal of commodities. Oil gave up earlier gains as China’s Shanghai Composite Exchange slumped to a 13 month low on concerns about banks’ abilities to raise funds. The country’s manufacturing index yesterday showed less than expected growth. The euro declined for a second day following reports yesterday European unemployment reached a 12 year high in April.

“The market is very sensitive to any news right now,” said Clarence Chu, a trader at options dealer Hudson Capital Energy in Singapore. “The dollar and euro exchange has been very volatile so that translates to the oil price. The soft euro will impact the dollar and that will hurt China’s export sector.” Crude oil for July delivery dropped 50 cents, or 0.7 percent, to $72.08 a barrel at 12:38 p.m. Singapore time on the New York Mercantile Exchange. Prices have swung between gains of 0.5 percent and losses of as much as 1.1 percent today.

Yesterday, the contract lost $1.39, or 1.9 percent, to $72.58. Futures fell 14 percent in May. The euro retreated as much as 0.3 percent today after hitting a four year low of $1.2111 yesterday. It was at $1.2191 at 12:39 p.m. Singapore time.
China’s purchasing manager’s index declined to 53.9 in May from 55.7 in the previous month. It fell short of a median 54.5 estimate from 18 economists surveyed by Bloomberg News. A gauge of manufacturing in the 16 member euro region declined to 55.8 from 57.6 the previous month, London based Markit Economics said.....Read the entire article.

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