Oil ends with biggest monthly loss since Dec '08

Thu May 31, 2012 5:47pm EDT
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By Gene Ramos

NEW YORK (Reuters) - Crude oil futures dropped on Thursday by more than 1 percent, ending May with their biggest monthly decline in more than three years as bloated U.S. stockpiles and weak economic data added to worries about the euro zone crisis, all dampening oil demand prospects.

Oil pared sharp losses of more than 2 percent in afternoon trading, after Dow Jones reported that the International Monetary Fund was considering a rescue loan to beleaguered Spain if it failed to bail out a big bank.

But IMF Managing Director Christine Lagarde later denied the report.

"There is no such plan. We have not received any request to that effect and we are not doing any work in relation to any financial support," Lagarde said in a statement.

Fears about potential oil supply disruption and a new Mideast conflict as Iran resumed talks with world powers over its disputed nuclear program had kept oil futures range-bound in recent weeks. But with growing signs of weakening growth in China, Europe and to some extent, the United States, investors have become leery of adding bullish bets on crude futures.

"The latest series of U.S. data has snuffed out recent silver linings that had kept growth moving, though at a slow pace, and Europe is imploding," said Mark Anderle, trader at TAC Energy in Dallas.

"Technical support has also vanished, so now you have a perfect cocktail for selling," he added.

Crude futures slumped to seven-month intraday lows after official data showed that U.S. crude oil stockpiles swelled last week, hitting the highest level in nearly 22 years. <EIA/S>   Continued...

A worker is silhouetted as he walks past fuel storage tanks at an oil refinery in Melbourne June 21, 2010. REUTERS/Mick Tsikas