U.S. crude oil futures settled lower Monday, as investors weighed some significant developments in France and the Netherlands that once again rekindled concerns over the eurozone sovereign debt and oil demand. The dollar strengthened against the euro and other major currencies, with markets across Europe losing heavily following the political developments and some weak economic data from China and Europe.
The Dutch Prime Minister and his cabinet resigned Monday, after failed talks with other parties on austerity measures to spruce up the Netherlands deficit budget with drastic spending cuts. It was a definite embarrassment the Dutch, as they had vociferously advised other crisis-ridden nations on the need for strict austerity measures, but find themselves at loggerheads over the same issue.
In France, the presidential elections have roiled the political scenario with Socialist Francois Hollande taking a significant lead into the second round of elections slated for May 6. Nicolas Sarkozy, an ardent supporter of austerity measures to counter the eurozone crisis, is struggling to hold on to the presidency after finishing second to Hollande.
Light Sweet Crude Oil futures for June delivery, dropped $0.77 or 0.7 percent to close at $103.11 a barrel on the New York Mercantile Exchange Monday.
Crude prices scaled a high of $103.90 a barrel intraday and a low of $101.82.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.491 on Monday, up from 79.140 in North American trade late Friday. The dollar scaled a high of 79.65 intraday, with a low of 79.20.
The euro was trading higher against the dollar at $1.3132 on Monday, as compared to $1.3219 late Friday. The euro scaled a high of $1.3211 intraday with a low of $1.3106.
In economic new, data from Markit Economics revealed that German private sector growth eased in April with activity reaching levels close to stagnation. The composite output index, that measures performance of both manufacturing and services, fell to a five-month low of 50.9 in April from 51.6 in March. A reading above 50 indicates expansion of the sector, while a reading below 50 suggests contraction.
The eurozone private sector activity declined further to a 5-month low in April, flash estimate published by Markit Economics showed. The composite output index dropped unexpectedly to 47.4 in April from 49.1 in March. Economists were forecasting the reading to rise to 49.3. A reading below 50 suggests contraction in the private sector.
From China, HSBC said its preliminary Purchasing Managers Index rose to 49.1 in April from 48.3 in March, indicating a recovery in Chinese growth in the first quarter. However, it still showed a second month of contraction, with a reading below 50 indicative of a drop in industrial production.
Investor focus will be on the crude oil inventories data from the API due Tuesday, and the EIA report on Wednesday.
by RTT Staff Writer
For comments and feedback: email@example.com