MW: Oil drops 5% on economic worries, falling stocks
Oil futures dropped sharply early Monday, as falling global equity markets and economic worries weighed on investor sentiment.
Crude oil for April delivery fell $2.39, or 5.4%, to $42.40 a barrel in electronic trading on Globex.
Earlier, it hit an intraday low of $42.15 a barrel.
"Oil prices remain under pressure, as markets are once again in the grip of recession concerns," said analysts at Action Economics. Strength in the U.S. dollar also pressured energy prices, they said.
On Wall Street, U.S. stock futures pointed to a sharply lower opening, as financial giants like American International Group ) and HSBC Holdings took moves to raise more capital. Equity markets in Asia and Europe also posted losses.
In the currency markets, the euro lost ground versus major rivals Monday after European Union leaders refused over the weekend to consider a coordinated bail-out package for troubled Eastern European economies. See Currencies.
The dollar index , which measures the currency against a trade-weighted basket of six global counterparts, rose to 88.64 in recent trade, up from 88.166 late Friday.
Oil prices fell "as global equity markets slumped and comments by an OPEC member suggest there may not be more cuts in March," said Brenda Sullivan, an analyst at Sucden Financial Research.
"Further bad economic news from Asia joined reports from the E.U. not to expect bailouts for Eastern Europe or the auto industry" and rekindled concerns that global economic problems will persist in hitting oil demand, she said.
Iran's oil minister said Sunday that the Organization of Petroleum Exporting Countries has no plans to cut its oil production again at its March 15 meeting, Dow Jones Newswires reported, citing Iranian media.
The comments differ from statements from other OPEC members that have indicated recently more production cuts are coming. The cartel already has announced an output reduction of 4.2 million barrels a day since September, equivalent to about 5% of global oil demand.
Also on Globex Monday, April reformulated gasoline fell 4 cents to $1.34 a gallon and April heating oil dropped 4 cents to $1.23 a gallon.
April natural gas futures gained 3 cents to $4.23 per million British thermal units.
