WSJ:OIL FUTURES: Crude Slumps As Spain Worries Trump Greece Optimism
-- Crude weaker as worries over Spain banking crisis trumps Greece optimism
-- Worries over Middle East oil supplies, as Iran talks falter, keeping prices supported
-- Investors seen turning focus to U.S. consumer confidence, housing data
By Selina Williams
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--Crude oil futures were weaker Tuesday as worries over Spain's banking sector and the ongoing euro-zone debt crisis trumped optimism over Greece.
The euro fell along with European equities on weak April retail sales figures from Spain, pressuring oil prices lower. European benchmark Brent tumbled below $107 a barrel after the Spanish figures showed the biggest decline in more than a year as consumers felt the squeeze from higher taxes, a weak economy and government austerity measures.
At 1109 GMT, the front-month July contract trading on the New York Mercantile Exchange was trading up 40 cents, or 0.5%, at $91.29 per barrel. The front-month July Brent contract trading on London's ICE futures exchange was down 16 cents at $106.95 per barrel.
Worries over Middle Eastern oil supplies, following a lack of progress on Iran nuclear talks, and expectations that U.S. data releases due later will show signs of improvement kept prices supported, but without enough conviction to make a big move higher, analysts said.
The U.S., the U.K., France, Germany, China and Russia are scheduled to hold talks with their Iranian counterparts June 18-19.
"There are risks on both the supply and the demand side, which more or less balance each other out," Commerzbank said in a note. "Fear remains the strongest driver, however, making further price falls more likely."
The bank pointed to the exit of investors from net long positions in Nymex crude in a move that took net longs, or bets that the price will rise, to their lowest level since September 2010.
Glen Ward, head of technical analysis at ICM Capital, said that although the bulls had taken advantage of low trading volumes--due to public holidays Monday in the U.S. and parts of Europe--to rally prices in their direction, the bears were likely to prevail.
"The bears are sitting comfortably as today's activity has failed to breach yesterday's high and feel that the current downtrend will ultimately work in their favor," Ward said.
Later, investors will turn their focus to U.S. data releases that are expected to be encouraging, following the improvement in last week's University of Michigan confidence figures. Case-Shiller data, due at 1300 GMT, are expected to show that house prices in the 20 largest cities increased 0.2% month-on-month in March, said Rabobank.
At 1110 GMT, the ICE's gasoil contract for June delivery was down $2.00 at $908.00 per metric ton, while Nymex gasoline for June delivery was up 121 points, or 0.4%, at $2.9050 per gallon.
