Commodity Corner: Oil Falls on Weak Economic Data

- Commodity Corner: Oil Falls on Weak Economic Data

Thursday, May 19, 2011
Rigzone Staff
by Saaniya Bangee

Oil prices fell below the $100-mark Thursday on weak economic reports.

Front-month crude lost $1.66, settling at $98.44 a barrel Thursday. At its quarterly meeting, the International Energy Agency (IEA) urged oil producers to increase supply. The agency, which acts as a watchdog for 28 industrialized nations, claimed that the high oil prices are hindering global economic recovery. Additionally, the Conference Board reported an unexpected decline in April's index of U.S. leading economic indicators. This marks the first decline in nearly a year.

Other U.S. economic data showed a decrease in home sales for the month of April while Mid-Atlantic manufacturing activity barely grew in May.

Although the U.S. Department of Labor announced a decrease in unemployment filings for the second straight week, traders were unable to get past the bigger picture. Oil prices bottomed out at $98.16 Thursday.

June natural gas futures plummeted to their lowest in nearly six weeks. Prices for natural gas settled 10.4 cents lower at $4.09 per thousand cubic feet. The 2.5 percent-drop came after the Energy Information Administration (EIA) reported that inventories grew by 92 billion cubic feet for the week ended May 13, almost 11 percent lower than the previous year. As the seasonal maintenance for nuclear power plants nears its end this month, some analysts predict the size of gas inventory builds may increase over the next few weeks.

The intraday range for natural gas was $4.09 to $4.20 Thursday.

RBOB gasoline prices fell by 2.95 cents Thursday. Prices traded within $2.91 to $3.00, before settling at $2.93 a gallon.

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Commodity Corner: Oil Drops on Weak Economic Data

- Commodity Corner: Oil Drops on Weak Economic Data

Tuesday, May 17, 2011
Rigzone Staff
by Saaniya Bangee

Oil prices continued to fall Tuesday on disappointing economic data and concerns about the euro's stability.

Light, sweet crude futures dropped $1.34, settling at $96.03 a barrel Tuesday. According to the U.S. Commerce Department, housing starts declined by 10.6 percent in April to 523,000. Additionally, the Federal Reserve reported a 0.4 percent decrease in April's industrial production—the first drop in 10 months. A decrease in industrial production represents a weak economic situation, signifying a lower demand for goods including crude oil.

Earlier in the day, the dollar received a boost as concern escalated on the instability of the euro. The euro retreated from earlier losses but remained vulnerable on anticipation that Greece may restructure its debt.

The intraday range for June crude was $95.02 to $97.81.

Likewise, gasoline futures also fell again Tuesday. Traders continued to sell Tuesday as fears eased over the effect of the Lower Mississippi River flooding on the refinery corridor from Baton Rouge to New Orleans. Front-month gasoline traded between $2.84 and $2.95 before settling a penny lower at $2.92 a gallon.

A report that industrial production declined in April caused natural gas prices to decrease for the first time in four days. Analysts worry that the data may cause the demand for fuel to soften. Natural gas futures settled at $4.25 per thousand cubic feet, down seven cents from Monday. Prices peaked at $4.33 and bottomed out at $4.16 Tuesday.

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