Oil set for weekly loss on European debt crisis

OIL HEADED for a third weekly drop in New York after Germany’s finance minister said Europe’s crisis may last another two years
Posted 5/18/12

NEW YORK - Oil headed for a third weekly drop in New York after Germany’s finance minister said Europe’s crisis may last another two years and reports added to evidence of a slowdown in China. Brent fell to its lowest this year in London.

West Texas Intermediate futures were little changed, after losing as much as 1 percent. German Finance Minister Wolfgang Schaeuble said on France’s Europe 1 radio that “in 12 to 24 months we’ll see a calming of financial markets,” sending the euro to a four-month low against the dollar.

Enbridge Inc. and Enterprise Products Partners LP reversed the Seaway pipeline to alleviate a glut in the U.S. Midwest. In China, home prices fell in a record number of cities last month and car dealers posted inventory levels that foreshadowed deeper price cuts.

“The market is facing strong headwinds from the stronger dollar and continuing concerns about the euro zone, such as a Greek exit, possible contagion, economic weakness and the possibility of further downgrades,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “Still, the underlying physical market is tighter than the price declines suggest.”

Crude for June delivery was at $92.40 a barrel, down 16 cents, in electronic trading on the New York Mercantile Exchange at 1:48 p.m. London time after falling as low as $91.60. The contract yesterday slipped 25 cents to $92.56, the lowest close since Nov. 2. Prices are 3.9 percent lower this week and down 6.5 percent this year.

Brent oil for July settlement dropped 28 cents, or 0.3 percent, to $107.21 a barrel on the London-based ICE Futures Europe exchange after falling to $106.40, the lowest intraday level this year.

The premium of the European benchmark to WTI for the same month was at $14.46. Earlier it narrowed to $13.62 a barrel, the least in two weeks, after the Seaway pipeline reversal allowed oil to be diverted from its delivery point in Cushing, Oklahoma, to the Gulf Coast.

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