May 302011
By Robert Tuttle and Christian Schmollinger – May 30, 2011 12:29 PM MT Oil dropped in New York, headed for its first monthly decline since August, on speculation that fuel demand will falter amid a slowdown in the U.S. economic recovery and Europe’s continuing debt crisis. Futures slipped as much as 1 percent before reports this week that may show U.S. employers hired fewer workers in May and manufacturing cooled. Concern that European governments will struggle to resolve the region’s debt crises weakened the euro against the dollar, reducing the appeal of commodities priced in the U.S. currency. Trading volumes were lower than average, with public holidays in the U.S. and U.K. “The dollar is a bit stronger today, which is a negative factor for prices,” said Carsten Fritsch, a Commerzbank AG analyst in Frankfurt. Greek debt problems “weigh on the euro.” Crude for July delivery fell 21 cents, or 0.2 percent, to $100.38 a barrel in electronic trading on the New York Mercantile Exchange. Earlier it touched $99.60. Prices have fallen 12 percent this month. Brent oil for July settlement lost 35 cents, or 0.3 percent, to $114.68 on the ICE Futures Europe exchange in London. The contract has fallen 8.3 percent this month. The European benchmark contract traded at a premium of $14.30 a barrel to U.S. futures. The difference between front- month contracts in London and New York surged to a record $19.54 on Feb. 21. It averaged 76 cents last year. U.S. floor trading is closed today for the Memorial Day holiday. Electronic trades will be booked with tomorrow’s transactions for settlement purposes. Weaker Euro The dollar gained 0.4 percent to trade at $1.4278 against the euro after Greek Prime MinisterGeorge Papandreou said he’ll press ahead with new austerity measures even as he failed to win backing from opposition parties. A strengthening dollar limits the appeal of commodities priced in the currency as a hedge against inflation. U.S. manufacturing, which accounts for about 12 percent of the world’s biggest economy, will probably cool following its strongest showing in seven years. The Institute for Supply Management’s factory index fell to 57.6 this month, the lowest level since October, according median forecast in the Bloomberg survey of economists. The Labor Department may say on June 3 payrolls rose 185,000 after a 244,000 gain in April, according to a separate survey. Employment Data “The employment data will be the key this week to really see what’s (more…)