Crude-Oil Futures Slump as Economic Outlook Weighs
02/21/2013| 10:12am US/Eastern
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--Weak economic data pushes crude lower
--Nymex crude recently 2% lower at $93.29/bbl
--EIA due to report weekly oil stockpiles at 11:00 a.m. EST
By Jerry A. DiColo
NEW YORK--U.S. crude futures fell to a fresh one-month low Thursday as disappointing economic data added to concerns about sagging fuel demand.
Light, sweet crude for April delivery recently traded $1.93, or 2%, lower at $93.29 a barrel on the New York Mercantile Exchange, the front-month contract's third decline in four sessions. Brent crude on the ICE futures exchange for April delivery traded $1.83 lower at $113.77 a barrel.
U.S. oil futures have fallen 4.2% this month, while Brent crude is down 1.5%, reflecting investor concerns that a January rally in oil and other riskier assets has outpaced a still-tepid economic outlook.
"We were due for a correction, and here is a correction. A lot of money was getting pushed into the market, speculative money, and it's taking a turn here," said Carl Larry, an analyst at trading advisor Oil Outlooks and Opinions. "Fundamentally, we're getting closer to fair value."
On Thursday, the Labor Department said U.S. jobless claims rose last week, highlighting the slow recovery in the labor market. Additionally, the decline in euro-zone business activity accelerated in February, according to data compiler Markit, which economists say likely means the bloc's economic contraction will continue through the first quarter.
Oil markets are tied to the global economic outlook, as weak growth typically results in sagging demand for gasoline, diesel and other fuels.
Gasoline futures, which shot to four-month highs last week, are also tumbling. Front-month March reformulated gasoline blendstock, or RBOB, recently traded 6.60 cents, 2.2%, lower at $2.0935 a gallon. Gasoline futures have fallen 4.4% this week, as retail prices at some of the highest levels for this time of year are threatening to curtail drivers' demand for the fuel.
Traders and analysts will turn their attention later Thursday to the weekly report on U.S. oil and fuel stockpiles from the U.S. Energy Information Administration, due at 11:00 a.m. EST. The report was delayed by one day due to the President's Day holiday on Monday.
Crude-oil stockpiles are expected to increase by 1.7 million barrels, according to a Dow Jones Newswires survey of analysts. Gasoline stocks are seen falling by 700,000 barrels, while stocks of distillate, which include heating oil and diesel, are seen falling by 1.6 million barrels.
Refineries are expected to trim operations by 0.2 percentage point.
The American Petroleum Institute, an industry group, said in its own survey late Wednesday that domestic crude stocks rose by 2.96 million barrels.
March heating oil recently traded 4.11 cents lower at $3.1152 a gallon.
Write to Jerry A. DiColo at jerry.dicolo@dowjones.com.
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