MW: Crude oil drops below $90 on Spain, China worries
Fears over Spain, scaled back China stimulus hopes weigh futures
By V. Phani Kumar and Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Benchmark U.S. crude-oil prices edged back below the $90-a-barrel level in electronic trading Wednesday as concerns over Spain and scaled-back expectations for Chinese economic stimulus lifted the dollar and hurt stocks globally.
The July contract for light, sweet crude-oil futures CLN2 -1.54% fell $1.09, or 1.2%, to $89.68 a barrel in electronic trade during European trading hours.
The drop extended a 10-cent loss for the futures on the New York Mercantile Exchange Tuesday.
The drop came as the ICE dollar index DXY +0.15% , which measures the greenback against a basket of six global currency counterparts, rose to 82.73 from 82.468 in North American trade Tuesday.
Investors were generally pulling out of risk assets as lingering concerns about Spain’s finances stoked fears about the euro zone. The country saw bond yields surge after Egan Jones Ratings Co., on Tuesday after the European markets closed, downgraded Spain to B from BB- with a negative outlook, pushing Spanish debt further into junk status.
European stocks were sharply lower with the Stoxx Europe 600 index XX:SXXP -1.04% down 0.9% at 242.06.
U.S. equity futures also retreated a day after stocks jumped on Wall Street, hurting sentiment toward energy commodities. Dow Jones Industrial Average DJIA +1.01% futures lost 82 points, or 0.7%, to 12,501, while the Standard & Poor’s 500 Index SPX +1.11% futures dropped 9.9 points, or 0.7%, to 1,323.50.
Asian markets mostly fell, meanwhile, as some expectations for action from Beijing were scaled back after state-run media reported Tuesday that Chinese authorities won’t resort to aggressive stimulus to stabilize growth. Read Asia Markets.
State media also cited several senior Chinese economists as saying any stimulus the government provided would be mild compared with the one launched in late 2008. Read more about the economists’ comments.
Elsewhere in the energy complex, June gasoline prices RBM2 -0.72% lost 0.5% to $2.89 per gallon, and heating-oil for delivery in the same month HOM2 -1.20% slipped 0.7% to $2.79 per gallon.
July natural-gas futures NGN12 -2.62% gave up 2.3% to $2.42 per million British thermal units.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
Sara Sjolin is a MarketWatch reporter, based in London.
