Economy and Business Info
Why crude oil in the U.S. fell for the financial crisis
Crude oil futures in the U.S. fell in May closed on Friday and the biggest monthly decline since December 2008, during the financial crisis.
The contract fell to risk aversion that caused the reduction in credit rating of Spain.
In the New York Mercantile Exchange, crude for June delivery fell 58 cents, or 0.78%, to 73.97 dollars per barrel, trading from 73.13 to 75.72 dollars.
Crude for the nearest contract fell 12.18 dollars, or 14.1% compared to April, its biggest percentage drop since December 2008, when prices declined by 18.1% from the previous month.
London Brent crude on the ICE closed at 74.02 dollars.
Fitch Ratings downgraded the credit rating of Spain on a step, saying the country’s economic recovery would be “weaker” than projected by the Government, due to the severe austerity measures adopted this week.
“Oil futures are down a lot and all down to the news of the credit downgrade of Spain. Looking long weekend, crude oil has clung to the stock market is falling because of fears in euro area, “said Mark Waggoner, president of Excel Futures in Bend, Oregon.
The Dow and S & P 500 in May recorded its worst monthly percentage drop since February 2009.
The euro fell after the decision of Fitch Ratings to downgrade the rating to Spain.
Weak economic data in the United States also pressured crude prices.
U.S. consumer spending was unexpectedly flat in April, although disposable income posted its biggest increase in nearly a year, the Commerce Department said.
The Institute for Supply Management-Chicago said its index of business activity in the Midwest fell in May. The business grew by less than expected after the decline in employment data.
U.S. consumer sentiment rose slightly in May compared to April but remained near the levels reported since February, while inflation expectations one year climbed to a record since October 2008, a survey group of Thomson Reuters and University of Michigan.
Earlier in the session, crude futures rose sharply on the rise of the euro and global equities.
Oil prices were extremely volatile in May. U.S. crude hit an intraday low of 64.24 U.S. dollars on May 20 before the expiry of the position in June, nearly $ 23 below a maximum at $ 87.15 3 May, and its highest level for 19 months.
The volatility made investors cautious, although some oil traders say the market would have found a floor.
A survey on Friday of the Organization of Petroleum Exporting Countries (OPEC) showed a rise in crude supply in May to its highest level in 17 months.
Oil demand in the United States climbed nearly 7% in the last four weeks, said the Energy Information Administration (EIA for its acronym in English), and led by a 16% rise in demand for distillates, which include diesel and heating oil.