Oil skids on euro zone woes, weak economic data

Thu May 17, 2012 4:03pm EDT
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By Gene Ramos

NEW YORK (Reuters) - Brent crude oil slumped more than 2 percent on Thursday to end at the lowest level since December, as investors avoided risky assets due to mounting fears that turmoil in Greece could spread to other stressed euro zone economies.

U.S. crude fell for the fifth straight session, pressured by weak economic data, which taken together with the gloomy news from Europe spelled bad prospects for oil demand going forward.

U.S. crude was down by less than Brent, as owners of the U.S. Seaway pipeline announced just after midday that its reversal was completed as expected.

Brent's premium to U.S. crude narrowed to below $15 a barrel from above $19 the previous session.

The initial flow of crude the Seaway pipeline will carry toward the main U.S. refining center in Houston was to occur by the weekend, a landmark move aimed at easing the supply glut of U.S. crude at the delivery hub in Cushing, Oklahoma. That should soften the premium that Brent has enjoyed over U.S. crude.

But market focus remained on Greece and the growing euro zone debt crisis that has been pressuring oil prices in recent days. Oil futures fell with U.S. equities which tumbled as a series of weak U.S. economic data piled on top of dreary news from Greece and Spain. .N

Greece faces new elections on June 17, after inconclusive polls this month left politicians unable to form a government. Whoever emerges as a new leader will have to deal with a country already falling behind on its promises to lenders.

The Fitch Ratings Agency downgraded Greece's credit rating to CCC from B-minus, citing the heightened risk that the country might leave the euro zone.   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