Oil falls as Greece, China feed economic worry

Mon May 14, 2012 5:05pm EDT
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By Robert Gibbons

NEW YORK (Reuters) - Oil prices fell on Monday as Greece's inability to form a coalition government and concerns about a slowing Chinese economy fed worries about the outlook for petroleum demand.

Greece's turmoil triggered selling in dollar-denominated copper and gold, sending a benchmark commodities index to a 19-month low, while pressuring the euro to a four-month low against the dollar and weighing on the stock market.

Hedge funds and large speculators made the biggest-ever cuts in their net long U.S. crude futures and options positions in the week to May 8, according to government data released on Friday, adding to this week's bearish sentiment.

Crude futures extended losses that, in the two weeks ending on Friday, left Brent crude down 6.2 percent and U.S. crude off 8.4 percent.

"The situation in Greece, hitting the euro, comes after last week's China data showing growth is slowing and the trading losses by JPMorgan have hurt confidence," said Phil Flynn, analyst at PFGBest Research in Chicago.

Brent crude fell 69 cents to settle at $111.57 a barrel, having slumped to $110.04, the lowest intraday price since last falling below the $110 level on January 25.

The front-month Brent June contract expires on Wednesday.

U.S. crude fell $1.35 to settle at $94.78, having slipped to $93.65, a 2012 low and weakest intraday price since December 19. Prices remained below the 200-day average after closing below that level on Friday.   Continued...

Gasoline drips off a nozzle during refueling at a gas station in Altadena, California March 24, 2012. Picture taken March 24, 2012. REUTERS/Mario Anzuoni