NEW YORK (Reuters) - Oil prices fell on Monday as European election results revived worries the euro zone debt crisis may spread, reinforcing anxiety about anemic economic growth and petroleum demand fueled by last week’s U.S. employment data showing slower job creation.
Crude futures fell for a fourth straight session as the outcome of elections in France and Greece raised doubts about the region’s ability to proceed with austerity measures seen as crucial to repair its economic woes and soaring debt.
Trading was choppy and Brent and U.S. crude managed some recovery from multimonth lows hit early that attracted bargain hunters.
“Optimists who recently believed that most of the risks concerning the euro were already ‘priced in’ are now discovering that this is by no means the case,” Commerzbank analysts Carsten Fritsch and Eugen Weinberg said in a note.
“We believe that this will weigh on the euro, market sentiment and commodity prices for some time to come.”
Brent June crude was down 41 cents at $112.77 a barrel at 1:01 p.m. EDT (1701 GMT). It earlier slumped to $110.34, the lowest intraday price since January 30 and marking a 14 percent retreat from the 2012 peak of $128.40 hit in March.
Brent’s 5.5-percent stumble last week was the biggest percentage weekly loss since the week to November 18, leaving prices below 100-day, 200-day and 300-day moving averages.
U.S. June crude fell $1.15 to $97.34 a barrel, having recovered from $95.34, the lowest intraday price since December 20. U.S. crude tumbled 6.1 percent last week, posting the biggest weekly loss since late September.
The Brent/U.S. crude spread widened, but in choppy trading, sending Brent’s premium to its U.S. counterpart back above $15 a barrel intraday.
With a UK bank holiday thinning trade, total crude trading volumes showed U.S. turnover higher than for Brent, but volume for both contracts lagged 30-day averages.
The relative strength index (RSI) for Brent sat at 26.7 and at 31.6 for U.S. crude. An RSI below 30 signals an oversold condition to investors watching technical indicators.
The euro initially dropped broadly on the renewed worries about the stability of the euro zone and the dollar index .DXY strengthened, weighing on oil and other dollar-denominated commodities such as copper and gold. <USD/> <MET/L> <GOL/>
After stock futures fell sharply, reacting to Europe’s election results, Wall Street equities had a more muted reaction after opening lower, supported by strong overall earnings reports and confidence that economic recovery remained intact, if sputtering. .N
Socialist Francois Hollande’s victory in France’s presidential election signaled a push back against German-led austerity policies.
Greece’s election created uncertainty over whether formation of a new government was possible.
Both the conservative New Democracy and Socialist PASOK were thrashed as Greeks voted against the two traditional ruling parties after they imposed austerity in exchange for a bailout to avert a sovereign default. The two parties must woo support from parties boosted in the election by opposing the bailout.
“Equity markets were nervous and the euro weaker as a result, directing some follow-through risk off selling into the oil markets,” Tim Evans, energy analyst for Citi Futures Perspective in New York, said in a note.
Greece might run out of cash by end of June if it does not have a government in place to negotiate a next aid tranche and projected state revenues fall short, three Greek finance ministry officials told Reuters on Monday.
The European Union (EU) executive said Greece must implement the reforms it agreed to under the second bailout program and that the European Commission is ready to help.
Additional reporting by Zaida Espana in London and Francis Kan in Singapore; Editing by Dale Hudson, Bob Burgdorfer and David Gregorio