Crude oil future decline as demand jitters prevail

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Crude oil decline as European governments struggled to contain the regional debt crisis, increasing fears that it will slow global economic recovery. Crude-oil futures ended lower on Friday after doubts about the pace of the economic recovery, and its impact on demand for oil, prevailed. Crude for July delivery, the most active contract, lost 76 cents, or 1.1%, to $70.04 a barrel. Gasoline for July delivery receded a penny, or 0.3%, to $1.9528 a gallon, while natural gas led losses, off nearly 2% to $4.1060 per million British thermal units.

Futures fell 1.1 percent as European Union finance ministers met today in Brussels to discuss the debts. Total U.S. inventories of crude oil rose to its highest level in 20 years to mid-May.

“Worry is that the European economy will drag the global economy into another recession,” said Bill O’Grady, the main market strategies in Confluence Investment Management in St. Louis, in an interview. “Because 2008 is so fresh in everyone’s mind, all the people I spoke just scared.”

Crude oil for July delivery fell 76 cents to settle at 70.04 U.S. dollars per barrel on the New York Mercantile Exchange. July contract has fallen for nine consecutive days, lost 13 percent since May 10. Prices slid 7.1 percent this week.

Oil prices are down 20 percent from 19-month high $ 87.15 until the date of 3 May. Futures touched a record U.S. $ 147.27 on July 11, 2008.

Brent crude oil for July settlement fell 16th cents to end the session at $ 71.68 per barrel on the ICE Futures Europe exchange at London. That was the lowest settlement since 8 February

“Less than three weeks ago we talked about how long the oil will reach $ 90,” said Gene McGillian, analyst and broker at Tradition Energy in Stamford, Connecticut. “Now we are wondering if prices will soon touch the $ 60. The main reason for this change in perception has evolved from the debt crisis of Europe.”

Euro has lost 12 percent against the dollar this year amid fears of Greek fiscal crisis will spread to other countries as governments work to reduce the deficit.

Votes Germany

German lawmakers approve their country’s share of euro-area bailout $ 1000000000000 in the vote today, allaying market fears that they will be refused emergency aid package approved two weeks as much.

Chancellor Angela Merkel called for regulations to stem the debt crisis of Europe and banned some types of short-selling this week. United prohibit naked short-selling for about one month after Lehman Brothers Holdings Inc. filed bankruptcy in September 2008 with debts of $ 613.000.000.000.

“Much of what we have seen associated with the perception of the situation in Europe,” said Sarah Emerson, director of Energy Security Analysis Inc. in Wakefield, Massachusetts. “A Greek defaults will not spell the end of the euro and is not similar to the collapse of Lehman Brothers. As a result, oil prices may be strengthened immediately.”

Record Supplies

Inventories of crude oil and all petroleum-based fuels increased to 1810000000 barrels in the week ended May 14 seasonally highest pile on Energy Department data through 1990.

High inventories have driven down the profit margin from refining crude oil into gasoline and heating oil from 15-month high. Crack spreads for July fell 13 percent this week, based on NYMEX futures prices.

U.S. gasoline production in April rose to the second highest monthly total on record, according to American Petroleum Institute today. Refinery produces 9.1 million barrels of gasoline on average last month, up 3 percent from a year earlier, according to industry trade group based in Washington.

Gasoline for June delivery fell 0.33 cent to end the session at $ 1.9612 per gallon. That was the lowest settlement since February 12. Futures fell 8 percent this week.

Standard & Poor’s 500 Index fell the most in 13 months yesterday on concern the European and U.S. jobless claims rose.

Risk Premium

“We had a premium of evaporation-of-risk as people exit the equity space, and oil is the opposite of a safe place at the moment,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Ill., consulting firm.

S & P 500 rebounded today after falling below the lowest level of the May 6 accident. Index rose 0.6 percent to 1,077.63. Dow Jones Industrial Average advanced 6.27 points to 10,074.28.

Oil will go up next week the stock market will rebound, and speculation the dollar will reverse, according to a Bloomberg survey.

Twenty-two of 41 analysts and traders, or 54 percent, predicted oil would rise until May 28. Fourteen respondents, or 34 percent, is expected to decline and the futures of five said the price will be slightly changed. Last week, 52 percent of survey respondents said the oil will get this week.

volume was 709 534 Oil on the NYMEX contract at 3:08 in electronic trading in New York. Volume amounted to 971 587 contracts yesterday, 31 percent greater than the average of the last three months. Open Interest 1.34 million contract. oil prices analyst, demand for crude oil in July 2010, future demand for crude