Oil tumbles as Greece, Europe fan demand concerns
NEW YORK, May 9 — Oil prices fell yesterday, stumbling for a fifth day as Greece's post-election uncertainty added to signs of economic slowdown on both sides of the Atlantic and fanned concerns about weakening demand for petroleum as supply increases.
Crude futures, the euro and stock markets were pressured by headlines saying leftist party leader Alexis Tsipras will not cooperate with Greece's two main parties, conservative New Democracy and socialist PASOK, unless they renege on pledges made to abide by a bailout deal made with the European Union and the International Monetary Fund.
Greece's Left Coalition has been given a three-day window to try and form a coalition government after New Democracy, which captured the largest vote share Sunday, failed to make headway.
"As Europe's political, financial and social cohesion crumbles, it will have the attendant effect on demand," said Michael Fitzpatrick, editor of industry newsletter Energy Overview in New York.
Oil prices were already under pressure after Saudi Arabian Oil Minister Ali al-Naimi said the kingdom's output was around 10 million barrels per day (bpd) and that the world's top exporter was storing 80 million barrels in case of any disruption in supplies.
Brent June crude tumbled US$1.90 (RM5.80) to US$111.26 a barrel by 1635 GMT (00:35am Malaysian time), having fallen to US$110.53, nearing Monday's US$110.34 intraday low.
US June crude fell US$1.87 to US$96.07. It slumped as low as US$95.52, also in sight of its Monday low of US$95.34, a 2012 low.
The Brent/US crude spread <CL-LCO1=R> was little changed as the two contracts saw choppy trading, with Brent's premium to its US counterpart swinging from US$14.78 to US$15.87 a barrel intraday.
Total Brent crude trading volume had topped 400,000 lots, outpacing US dealings, though turnover for both lagged 30-day averages at midday in New York.
The weekend's elections prompted an early Monday selloff as France's choice of a new leader and Greece's inability to form a new government shook an already fragile outlook for the debt-laden region. Disappointing US jobs data last week had already stoked concerns about growth in the world's largest economy.
Leading German politicians warned Greece yesterday that the country would not receive a cent more aid unless it fulfils all the conditions of its international bailout.
Europe turmoil hits across markets
The political uncertainty in Greece sent the euro lower against the dollar for a seventh straight session. On Wall Street, all three major US stock indexes fell more than 1 per cent.
Key industrial feedstock copper fell to a two-week low as Greece's travails reinforced the possible threat to the demand outlook for industrial metals.
US Treasury debt prices rose, pushing benchmark yields to three-month lows, as Greece's post-election uncertainty stoked safe-haven buying of US government debt.
Kuwait: US$100 oil price fair
Kuwaiti Oil Minister Hani Hussein was quoted by newspaper al-Rai yesterday as saying oil prices should be around US$100 per barrel.
The Brent price stood above US$113 a barrel at the opening of Tuesday trading.
Member countries of the Organization of the Petroleum Exporting Countries have expressed concern that very high oil prices earlier this year could hit consumption and dent world economic activity.
US oil inventories
Crude oil stocks in the United States, already at their highest since 1990, are expected to have risen a seventh straight week, as supply in Cushing, Oklahoma, builds ahead of a reversal of a key pipeline connecting the Midwest and the refinery-rich Gulf Coast, a Reuters poll on Monday showed.
Inventory data from the American Petroleum Institute (API) is due yesterday at 4:30 p.m. EDT (2030 GMT), followed by the US Energy Information's (EIA) weekly report on Wednesday.
The EIA raised slightly its 2012 world demand growth forecast by 70,000 bpd, in a monthly report yesterday, but cut its 2013 estimate by 140,000 bpd. — Reuters