Investing.com - Crude oil futures retreated during European morning trade on Monday, with losses accelerating following the release of dismal manufacturing data from the euro zone, which added to concerns over the health of the region’s economy.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD103.22 a barrel during European morning trade, shedding 0.64%.
It earlier fell by as much as 0.71% to trade at a session low of USD103.08 a barrel.
Crude’s losses picked up after Markit said that its preliminary euro zone manufacturing purchasing managers’ index fell by 1.7 points to a seasonally adjusted 46.0 in April from a final reading of 47.7 in March. It was the lowest level since June 2009.
The report came after Markit said that its German manufacturing purchasing managers’ index declined to a seasonally adjusted 46.3 from a final reading of 48.4 in March. Analysts had expected the index to rise to 49.0 in April.
Reduced levels of output, new orders and employment meant that the headline German manufacturing PMI fell to its lowest since July 2009.
A separate report showed that while France’s manufacturing index ticked higher, the country’s services PMI slowed to its slowest pace in six months.
The data came after a report showing that Chinese manufacturing activity remained in contraction territory in April, fuelling concerns over a slowdown in the world’s second largest economy.
Oil traders often use manufacturing numbers as indicators for future fuel demand growth.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Meanwhile, a political crisis in the Netherlands and uncertainty over the outcome of the French presidential election added to fears over the outlook for the euro zone.
Also weighing on risk sentiment, Spanish 10-year yields rose above the key 6.0%-level in early trade Monday, hitting 6.05%.
There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears Spain will be the next in the euro zone to require a bailout.
The news prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to traditional safe haven assets like the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.3% to trade at 79.52.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Meanwhile, market participants continued to monitor ongoing tension between Iran and the West and a potential disruption to oil supplies from the Islamic Republic.
Iran's crude exports declined to 2.1 million barrels per day, compared with a daily average of 2.3 million in the last Iranian year that ended on March 19, Iranian oil officials said in a report on Friday.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices this year and prices could potentially go higher when a European Union embargo on Iranian oil imports goes into effect on July 1.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery fell 0.55% to trade at 118.11 a barrel, with the spread between the Brent and crude contracts standing at USD14.89.
Brent futures have been under pressure in recent weeks as the market is now balancing assurances from Saudi Arabia that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran.
Saudi Arabia and Iran are the two largest oil producers and exporters among OPEC members.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD103.22 a barrel during European morning trade, shedding 0.64%.
It earlier fell by as much as 0.71% to trade at a session low of USD103.08 a barrel.
Crude’s losses picked up after Markit said that its preliminary euro zone manufacturing purchasing managers’ index fell by 1.7 points to a seasonally adjusted 46.0 in April from a final reading of 47.7 in March. It was the lowest level since June 2009.
The report came after Markit said that its German manufacturing purchasing managers’ index declined to a seasonally adjusted 46.3 from a final reading of 48.4 in March. Analysts had expected the index to rise to 49.0 in April.
Reduced levels of output, new orders and employment meant that the headline German manufacturing PMI fell to its lowest since July 2009.
A separate report showed that while France’s manufacturing index ticked higher, the country’s services PMI slowed to its slowest pace in six months.
The data came after a report showing that Chinese manufacturing activity remained in contraction territory in April, fuelling concerns over a slowdown in the world’s second largest economy.
Oil traders often use manufacturing numbers as indicators for future fuel demand growth.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Meanwhile, a political crisis in the Netherlands and uncertainty over the outcome of the French presidential election added to fears over the outlook for the euro zone.
Also weighing on risk sentiment, Spanish 10-year yields rose above the key 6.0%-level in early trade Monday, hitting 6.05%.
There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears Spain will be the next in the euro zone to require a bailout.
The news prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to traditional safe haven assets like the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.3% to trade at 79.52.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Meanwhile, market participants continued to monitor ongoing tension between Iran and the West and a potential disruption to oil supplies from the Islamic Republic.
Iran's crude exports declined to 2.1 million barrels per day, compared with a daily average of 2.3 million in the last Iranian year that ended on March 19, Iranian oil officials said in a report on Friday.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices this year and prices could potentially go higher when a European Union embargo on Iranian oil imports goes into effect on July 1.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery fell 0.55% to trade at 118.11 a barrel, with the spread between the Brent and crude contracts standing at USD14.89.
Brent futures have been under pressure in recent weeks as the market is now balancing assurances from Saudi Arabia that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran.
Saudi Arabia and Iran are the two largest oil producers and exporters among OPEC members.