MW: Oil tumbles on worries swine flu may halt economic recovery
- Oil futures fell nearly 4% Monday, as the outbreak of a deadly swine flu raised concerns over the prospects for a global economic recovery.
Crude oil for June delivery dropped $1.84, or 3.6%, to $49.71 a barrel on the New York Mercantile Exchange. Earlier, the contract slumped nearly 7% to hit an intraday low of $48.01 a barrel.
"Fear is dominating the cyclical commodity markets today, as investors are concerned that the spreading of swine flu in Mexico may severely damp hopes of an economic recovery," said analysts led by Eugen Weinberg at Commerzbank in a note to clients.
However, "we consider these concerns premature and expect the oil price to move sideways, with some volatility between $45 and $55," they said. "Given that oil market fundamentals are still weak, downside risks prevail at the moment."
On Wall Street, stocks were trading mixed. The Dow Jones Industrial Average was up 0.2% to 8,093.81. It earlier fell to 7,987 amid concerns over the outbreak of swine flu, which originated in Mexico.
The disease has killed 103 people in Mexico and virtually shut down Mexico City on Sunday, while the U.S. declared a public health emergency. See full story.
"Nervousness about another batch of U.S. earnings reports and macro reports, coupled with a potential pandemic out of Mexico, are weighing on [oil] prices," said Edward Meir, an analyst at MF Global, in a note to clients.
"The Mexican situation is resurrecting fears of the chilling impact that the SARS epidemic had on economic growth," Meir said.
Investors sought refuge in currencies, which helped the U.S. dollar and Japanese yen.
The dollar index , a measure of the greenback against a trade-weighted basket of currencies, stood at 85.235, up from 84.772 in North American dealings late Friday but off highs seen earlier Monday. See Currencies.
Also in energy trading, May reformulated gasoline fell 5.13 cents, or 3.5%, to $1.3962 a gallon and May heating oil dropped 5.05 cents, or 3.7%, to $1.3178 a gallon.
May natural-gas futures fell 8.5 cents, or 2.6%, to $3.212 per million British thermal units.
