Crude-oil futures closed lower for a fifth session on Tuesday, as weakness in global markets in the wake of elections in Europe dented expectations for economic growth.
Crude for June delivery fell 93 cents, or 1%, to settle at $97.01 a barrel on the New York Mercantile Exchange, following a drop of 55 cents in the prior session. It touched an intraday low of $95.52.
Oil futures have now tallied a five-session loss of 8.6% to stand at their lowest level since early February.
“European growth concerns and market jitters following the U.S. employment report on Friday have placed the two greatest risks to the global economic outlook front and center,” said Jason Schenker, president of Prestige Economics.
“Rising U.S. oil inventories have also weighed” on prices, he said.
A string of weekend elections in Europe — France, Germany and Greece — saw voters reject established leaders, with Socialist challenger François Hollande defeating incumbent French President Nicolas Sarkozy. And Greece is now locked in political turmoil after parliamentary elections left the country’s parties struggling to form a government.
“The decline in equity and oil prices squares with the uncertainty and diminished outlook for the euro zone,” said Michael Fitzpatrick, editor-in-chief of the Kilduff Report.
“There was little chance that the [European Union] was going to find a relatively painless way out of its conundrum when the crisis broke several years ago, and there is even less chance now,” he said. “The dismal prospect for aggregate demand, particularly for oil, is growing as remedies become fewer and less palatable.”
Meanwhile, the latest round of U.S. economic data are “troubling in itself,” said Schork Report analysts. They pointed to the weaker-than-expected growth in nonfarm payrolls for April along with a drop in March factory orders that showed a 33.8% decline in orders for the transportation sector, aircraft and parts.
“Not only does the aviation sector account for the U.S.’s largest single source of export revenue, a slowdown in orders is also reflective of weaker global demand,” said the analysts.
Gold also settled sharply lower on Tuesday, while the dollar rose. Strength in the greenback adds pressure to dollar-denominated commodities.
U.S. and European stocks fell, though Asian markets generally rebounded overnight.
Source: Myra P. Saefong and Barbara Kollmeyer, MarketWatch.com