Crude Tumbles on Economic Worries
Source: Dow Jones, Jerry DiColo (3/10/11)
"Futures tumbled over 3.5% as traders eyed signs of global economic weakness."
Light, sweet crude for April delivery recently traded $3.14 lower at $101.24 a barrel on the New York Mercantile Exchange, after falling as low as $100.62. Brent crude on the ICE futures exchange fell $1.68 lower at $114.26 a barrel.
Fighting continues in Libya between rebel forces and those loyal to Moammar Gadhafi, and Libya's de facto oil minister said the country's oil output has fallen to 500,000 barrels a day from 1.6 million barrels before the conflict began.
But oil traders have already factored in much of the loss of production into futures prices. Until the next development in the region, investors have turned to signs that the global economic recovery remains tenuous.
"For the first time this week, we're seeing attention shift from the Middle East unrest," said Matt Smith, an oil analyst with Summit Energy.
New jobless claims in the U.S. rose by more than expected Thursday, while in Europe, stocks and the euro fell after a downgrade of Spanish government debt returned the euro zone's debt issues to center stage.
Weak export data from China also raised concerns about continued oil demand in the world's second largest crude consumer. The country posted a $7.3 billion trade deficit in February, compared with expectations for a surplus, as oil and food costs rose.
The economic reports applied pressure across markets, with most commodities falling along with equities.
The Dow Jones Industrial Average was recently down 190 points at 12023.
With oil prices already above triple digits, analysts said a continued surge higher will depend on increasing demand or a more severe supply disruption in the Middle East.