MW: Crude falls below $59 a barrel, adding to last week's losses
Natural-gas contract paces latest pullback in energy
NEW YORK (MarketWatch) -- Oil futures fell sharply to trade below $59 a barrel on Monday, adding to last week's steep losses, as concerns over weak demand encouraged traders to sell crude.
Light sweet crude for August delivery was down $1.17, or 2%, to $58.69 a barrel on the New York Mercantile Exchange. Earlier, the contract touched an intraday low of $58.32 a barrel in electronic trading on Globex.
"The market still is concerned about the economy overall," said Phil Flynn, vice president at futures trading and research firm PFG BEST Research.
"There is a sense right now that with the economic outlook being what it is, the demand prospects are still very poor," Flynn said.
Crude futures tumbled 10.3% last week, posting their biggest weekly loss since the five sessions ended Jan. 9. See full story.
The International Energy Agency on Friday reasserted its forecast that global oil demand for 2009 will fall 2.9%, or 2.5 million barrels a day, from a year ago.
Long positions decline
Big speculators such as hedge funds and investment banks sharply reduced their buying positions, as the futures market regulator said it's considering setting limits in energy speculation.
Long, or buying, positions held by non-commercial traders, a category the regulator uses to classify big speculators, dropped by 16,382 contracts in the week ended July 7, according to the weekly Commitments of Traders report released by the Commodity Futures Trading Commission late Friday. Read more.
USO 31.97, -0.41, -1.26%
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That's the biggest drop in four months in oil futures traded on the New York Mercantile Exchange, according to COT historical data.
"It finally seems as if the abundant supply of crude, coupled with the fact that the economy is not improving at a break-neck rate, are coming together and putting the market down," said Zachary Oxman, managing director at TrendMax Futures.
"I believe you'll see high 40s in the coming weeks as stocks and commodities continue to slide," Oxman said in emailed comments.
On Wall Street, U.S. stocks rose, with the S&P 500 index (SPX 894.38, +15.25, +1.74%) gaining 7.60 points, or 0.9%, to 886.75 points. See Indications.
"Although crude oil markets remain rather oversold after six days of declines in the last seven, the deteriorating chart picture suggests that further declines are in the cards, even if a temporary bounce from oversold conditions sets in," said Edward Meir, analyst at MF Global, in a note to clients.
Also on the Nymex, August reformulated gasoline fell 4 cents, or 2.3%, to $1.61 a gallon and August heating oil dropped 4 cents to $1.49 a gallon.
August natural gas fell 10 cents, or 3%, to $3.27 per million British thermal units.
In exchange-traded funds, the United States Oil Fund (USO 31.97, -0.41, -1.26%) fell 2% to $31.72 and the United States Natural Gas Fund (UNG 12.04, -0.26, -2.11%) dropped 2.4% to $12.06.
