Forexpros – Crude oil futures added to heavy losses on Monday, tumbling to a three-day low after lackluster trade data from China raised fears over the global economic outlook as investors continued to mull Friday’s ruling that a credit event had been triggered by Greece’s debt swap with its private creditors.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD105.62 a barrel during U.S. morning trade, tumbling 1.65%.
It earlier fell by as much as 1.9% to trade at a three-day low of USD105.39 a barrel. Prices rose to a one-week high of USD108.18 a barrel on Friday.
Concerns over the global economic outlook intensified after official data released over the weekend showed that China swung to a massive trade deficit of USD31.5 billion in February, the largest since 1989, from a surplus of USD27.3 billion in January.
The data reflected a significant drop in exports, while imports rebounded after a Lunar New Year holiday slowdown.
January-February export growth slowed to 6.9% over the same two-month period last year, barely half of December’s 13.4% rate. Imports for the two months rose 7.7%.
China’s lackluster trade data follows reports last week that showed the weakest January-to-February gain in factory production since 2009 and retail sales falling below estimates.
China is the world’s second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Market sentiment came under further pressure after the International Swaps and Derivatives Association said Friday that Greece’s debt swap with private creditors constituted a “credit event”, which would activate credit-default swaps, designed to protect investors against losses on Greek sovereign debt.
Concerns over the euro zone’s debt crisis were expected to linger, amid renewed concerns over the fiscal health of Spain and Portugal and worries over downbeat growth prospects in the region.
Later in the day, euro zone finance ministers were to hold talks in Brussels, to give their final approval to a EUR130 billion bailout for Greece.
Ministers were also likely to discuss Spain, after Prime Minister Mariano Rajoy announced earlier this month that the country would cut its public deficit to 5.8% of annual output, instead of the planned 4.4% this year.
Meanwhile, oil traders continued to monitor tensions between Iran and the West surrounding the Islamic Republic’s nuclear program.
Iranian President Mahmoud Ahmadinejad launched a fresh tirade against the West over the weekend, saying the Islamic Republic does not fear military action.
The stand-off between Iran and Western countries has dominated sentiment in the oil market for weeks.
Fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing have been supporting prices in recent months.
Iran produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the OPEC, after Saudi Arabia.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery dropped 1.15% to trade at 123.91 a barrel, with the spread between the Brent and crude contracts standing at USD18.29.
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