Euro-zone crisis, Bernanke comments weigh; natural gas bucks the trend
By Myra P. Saefong and Michael Kitchen, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures edged lower Tuesday, poised to log a third-straight session in the red as uncertainty over Europe’s sovereign-debt crisis and weak U.S. economic growth hurt prospects for future oil demand.
Crude oil for November delivery CL1X -0.61% fell 52 cents, or 0.7%, to $77.09 a barrel on the New York Mercantile Exchange.
“Oil is the blood that sustains the heart of economic growth,” said Keith Springer, president of Springer Financial Advisors. “Slower economic growth means less aggregate demand leading to less production of goods and therefore a reduced use of oil.”
Still, prices traded well off the day’s $74.95 low after having fallen by nearly 6% over the past two sessions. They closed at a more-than-one-year low on Monday. Read more on Monday’s crude moves.
Economic prospects in the U.S. and around the world remained grim Tuesday.
Goldman Sachs forecast that the euro zone will slip into a “mild recession” in the fourth quarter of 2011 and first quarter of 2012. Read more about the forecast.
Against that backdrop, rival benchmark Brent crude oil fell below $100 a barrel before rebounding a bit to trade at $101.10 a barrel, up 61 cents.
Over in the U.S., Federal Reserve Board Chairman Ben Bernanke told the Joint Economic Committee of Congress that a close reading of recent economic data doesn’t show any hint of improvement ahead for the weak U.S. labor market. Last week, Bernanke called the weak labor market a national crisis. Read more of Bernanke’s statement.
Meanwhile, news over the weekend that Greece’s budget wouldn’t meet its austerity targets had helped weigh on crude Monday, and a meeting late Monday of euro-zone finance ministers failed to offer any new initiatives, adding to uncertainty.
“Comments out of [European Union] officials continue to flow at cross-currents and cross-purposes to one another, irritating market sensitivities to [euro-zone] uncertainty,” said RBC Capital Markets analysts in a research note Tuesday.
On tap
Looking ahead, the American Petroleum Institute will release its weekly data on petroleum supplies at 4:30 p.m. Eastern time Tuesday. The Energy Information Administration’s more closely-watched figures will come out Wednesday at 10:30 a.m. Eastern.
Analysts polled by Platts expect the data to show that crude-oil stocks rose by 2.5 million barrels for the week ended Sept. 30. They also expect gasoline stocks to be up by 1.3 million and distillates to fall by 500,000 barrels.
For now, November heating oil HO1X -0.19% traded fractionally lower at $2.75 a gallon, but November gasoline RB1X +0.26% tacked on 0.8 cent to $2.52 a gallon.
Natural gas for November delivery NG11X +0.47% traded at $3.63 per million British thermal units, up 1.7 cents.
There isn’t much reason for the climb in natural gas “other than traders covering positions,” said Beth Sewell, managing partner at Quantum Power & Gas Services. “Short-term weather forecasts show above-normal temps, which means heat load (or demand for natural gas for heating in winter) will be delayed a bit longer, plus the continued anemic demand in combination with continued growth in production all spell reasons for prices to stay soft.”
