By Laura Mandaro and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures fell further into the red Monday after Standard & Poor’s dropped its outlook on the U.S. government’s credit rating to negative, sparking a rush from stocks and growth-leveraged commodities.
Benchmark light, sweet crude for May delivery CLK11 -2.41% fell $2.33, or 2.1%, to $107.31 a barrel on the New York Mercantile Exchange.
Gasoline, natural gas, copper, corn and soybeans were all lower. The Dow Jones Industrial Average DJIA -1.86% fell 174 points in early trading. Gold added to gains, with the June gold contract GCM11 +0.52% rising $10.30 to $1,496.40 an ounce.
Before the start of U.S. trading, Standard & Poor’s said it slashed its outlook on the U.S. to negative from stable, though it kept its triple-A rating on the world’s largest economy.
“More than two years after the beginning of the recent crisis, U.S. policy makers have still not agreed on how to reverse recent fiscal deterioration,” Standard & Poor’s said.
Ahead of the report, oil had traded lower -- but above $108 a barrel -- as investors overlooked news that Saudi Arabia had cut output.
Saudi Oil Minister Ali al-Naimi said that April production was expected to rise slightly from March levels, according to the reports.
Last month, Saudi Arabia’s output reached 8.292 million barrels a day, down from 9.125 million in February, the reports said. Some major oil-consuming nations had hoped Saudi output could help send oil prices lower.
The reports came as geopolitical tensions and violent attacks continued across the Middle East and North Africa over the weekend, stoking uncertainty in oil markets. Read more about Middle East and North African unrest.
“The market remains far from any equilibrium, supply losses have not been made good, geopolitical risk remains elevated, spare capacity is still falling, and the very limited movement along the demand curve in response to higher prices has thus far been an order of magnitude less than the supply-side outages,” analysts at Barclays Capital said in a research note.
However, concerns eased about violence in presidential elections in Nigeria, a major oil exporter, with CNN reporting the vote was “largely peaceful.”
Media reports following the Saturday election said incumbent Goodluck Jonathan was likely to win re-election, with official results possible as early as Monday. See report on concerns surrounding Nigerian election.
