Spain’s downgrade brings demand concerns to the fore
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures inched lower Friday, vying to break a three-session winning streak after a debt downgrade for Spain called into question global demand for oil.
News the U.S. economy grew less than expected also dragged oil futures down.
Crude for June delivery CLM2 -0.07% declined 6 cents, or 0.1%, to $104.50 a barrel on the New York Mercantile Exchange. On the week, crude is looking at a rise of 0.6%.
“Crude is once again looking sluggish” after the Spanish downgrade shone “the spotlight of scrutiny back on the European debt crisis,” said in a note to clients Matt Smith, an analyst at Summit Energy in Kentucky.
Futures trimmed losses, however, as U.S. equities opened higher on positive earnings for heavyweight Amazon.com Inc. AMZN +13.59% , and the dollar traded lower.
Prices are not getting pummeled “as general risk appetite remains intact; all this week equities have been ignoring poor economic data releases and rallying on decent earnings releases instead, and crude has fallen into this mindset too,” Smith added.
Standard & Poor’s Ratings Services downgraded Spain’s bonds by two notches, pushing yields on government bonds up and reigniting the concerns about the euro zone.
The debt ratings agency said the downgrade reflects worries about increased risks of the country’s government debt balanced against difficult economic conditions, as well as the potential need of more support for the banking sector.
Other energy futures were mixed, with May gasoline RBK2 +0.77% advancing 2 cents, or 0.8%, to $3.21 a gallon. May heating oil HOK2 -0.18% , however, declined less than a cent, or 0.2%, to $3.19 a gallon.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
