Forex Pros – Crude oil futures were down for a second day on Tuesday, as concerns over the pace of the U.S. economic recovery added to fears of a slowdown in demand from the world’s largest oil consumer.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in June traded at USD96.72 a barrel during European morning trade, sliding 0.3%.
It earlier fell by as much as 0.38% to USD96.64 a barrel, the lowest price since May 12.
Data on Monday showed that manufacturing in the New York region expanded at a significantly slower pace than anticipated in May, as the cost of raw materials surged.
The Federal Reserve Bank of New York’s general economic index dropped to 11.9 in May, down from a one-year high of 21.7 in April
Receding concerns over a disruption to U.S. supplies also weighed on prices after the opening of the key Morganza spillway in Louisiana curbed speculation the Mississippi River will flood refineries and disrupt fuel supplies.
Meanwhile, a stronger U.S. dollar also contributed to oil’s weakness. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.27% to hit 75.89.
Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.
However, losses were limited after Zhang Fuqin, deputy chief engineer at PetroChina’s petroleum and petrochemical engineering institute said that China’s oil demand this year could rise 6.7% to 482.96 million metric tons.
China is the world’s second largest crude oil consumer, with the International Energy Agency forecasting that China will account for approximately 40% of global oil demand growth in 2011.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery shed 0.05% to trade at USD110.29 a barrel, up USD13.57 on its U.S. counterpart.
ForexPros.com
