NYMEX June crude oil led the selloff in petroleum complex futures Monday, settling down $1.35 to $94.78/barrel as macroeconomic concerns out of Europe and disappointing Chinese industrial production figures weighed on prices.
ICE June Brent settled down 69 cents to $111.57/b, up slightly from an intraday low of $110.04/b.
In products, NYMEX June RBOB futures dropped 4.18 cents to $2.9590/gal, while heating oil futures fell 3.41 cents to $2.9295/gal.
NYMEX June crude futures have fallen by more than $9/b over the last eight days, pausing only briefly in Thursday trading when the settled slightly higher at $97.08/b. The selloff continued Monday on disappointing economic news out of the eurozone.
John Kilduff of Again Capital in New York chalked up Monday's selloff to a continuation of last week's selling.
"There is a herd mentality and everyone is selling more today with the Greek issues and the euro below $1.29 is a significant event for commodities," Kilduff said, adding that investors are moving increasingly toward the dollar.
The euro was down 72 points to $1.2846 Monday as Greece's future as a eurozone member has been called into question and German elections over the weekend suggested waning support for Angela Merkel's ruling party.
The EU warned Greece Monday to stick to rules for a debt rescue or risk leaving the eurozone, according to AFP (See story, 1136 GMT).
Amrita Sen, AVP of Commodities Research at Barclays Capital, said in a note that "given the severity of the repercussions of [a Greek] exit for all euro area members, our economists believe that such a scenario will be avoided at all costs."
Addressing concerns that Brent could drop to or below $100/b, Sen said "we think it is unlikely that [$100/b] will be matched again soon unless something comes out of left field, radically transforms the macroeconomic outlook and re-energizes the macro short on oil."
"Even under those circumstances, we would expect OPEC to start to trim output in the face of the latest resurgence in sovereign debt concerns," she continued.
Meanwhile, Chinese industrial data on Friday showed 9.3% annual growth rate, well below a Bloomberg consensus of 12.2%, according to a JPMorgan note.
But Sen and the economists at Barclays Capital expect the Chinese government to "take further measures to stabilize growth, including more investment projects, reducing the tax burden and allowing private sector investment in strategic industries" and predicted that the country's growth will bottom out in the second quarter.
And while the negative economic news out of Europe is distressing, Jacob Correll of Summit Energy Services said he is keeping his eye on China.
Due to intense oil demand of China's economy, Correll sees a slide in China having a much more pronounced effect on the oil market. While Europe has been wrestling with lackluster economic growth, with some nations mired in a second recession, Chinese demand has provided a price floor for many commodities, including oil.
"Bad news has been pouring out of Europe, one thing after another. But a poor reading out of China is just a whole different level," Correll said.
