RTRS: Oil falls on weak euro zone data, recession worry
By Robert Gibbons
Oil prices fell on Monday after weak euro zone data showed contracting industrial output and highlighted the possibility of a regional recession as Europe struggles to contain its sovereign debt crisis.
Industrial production in the 17-country bloc fell 2.0 percent in September from August, the European Union's statistics office said. This dimmed support for oil from investors who had hoped new governments in Italy and Greece would help their economies avoid a collapse.
The euro fell versus the dollar on the poor industrial data, strengthening the dollar index .DXY and helping pressure dollar-denominated oil. Equities in Europe and on Wall Street also felt pressure from the data. .EU .N
"The markets are realizing there are real economic problems in Europe," said Christophe Barret, global oil analyst at French bank Credit Agricole.
German Chancellor Angela Merkel said on Monday that Europe could be living through its toughest hour since World War Two as new leaders in Italy and Greece formed new governments in order to limit damage from the debt crisis.
ICE Brent December crude fell $1.83 to $112.33 a barrel by 11:20 a.m., having traded from $111.92 to $114.83.
U.S. December crude fell $1.10 to $97.89 a barrel, after settling at a 15-week high on Friday.
Trade was choppy and the spread between front-month U.S. December crude and the January contract slipped into contango -- where the front-month price is weaker than nearby months.
Crude had been in backwardation, considered a more bullish condition, where the front-month is more expensive than contracts further out.
U.S. December crude options expire on Tuesday and the contract expires on Friday.
Brent's premium to U.S. crude narrowed, dropping below $15 a barrel, continuing its retreat from a $19.91 intraday peak on Nov 8.
Trading volumes for Brent and U.S. crude were tepid, with Brent 32 percent below its 30-day average and U.S. volume 42 percent below its 30-day average ahead of midday in New York.
U.S. heating oil futures managed to stay choppy near flat, supported by seasonal expectations for approaching winter demand and exports, while gasoline futures tumbled on weak demand and expected imports.
(Additional reporting by Gene Ramos in New York, Christopher Johnson and Angela Bulgari in London and Manash Goswami in Singapore; Editing by David Gregorio)
