Given the weekend’s political events in Europe and the way futures were acting in electronic trading on Sunday evening, it was no surprise to see oil extend its losing streak to four straight days on Monday. NYMEX-crude for June delivery lost 55 cents to settle at $97.94 per barrel. In London, Brent crude for June delivery dropped two cents to finish the day at $113.16 a barrel. That’s the lowest closing price for Brent, the global benchmark, in over three months. On weak volume, the PowerShares DB US Dollar Index Bullish (NYSE: UUP) closed modestly higher.
The results of the French and Greek elections held over the weekend roiled commodities and equities markets, but not to the degree most investors would have thought, perhaps indicating the market anticipated the worst out of Europe and priced that in last week. Still, NYMEX-traded oil has slid almost 8% in the past four trading sessions.
News of the victory by socialist Francois Hollande in France’s presidential election and news that no coalition government will emerge after Greek elections had the potential to be a real killer for oil and other riskier assets today. In the case of France, the Hollande victory is seen as trouble for austerity reforms in the Euro Zone’s second-largest economy. The results out of Greece were not all that surprising and one could now argue that the market is looking past the "G" in PIIGS.
West Texas Intermediate does have some technical issues to deal with. Traders believe it will be necessary for the contract to reclaim the $100 per barrel area or risk downside to the low $90s. Continued bearishness on the inventory front and more troubling U.S. economic data points could result in a near-term test of the $90 area for crude.
In global oil news, the U.S. has called on India to halt imports of Iranian crude. It was also reported today that Iran, which has been sanctioned by the West, is accepting Chinese yuan as payment for oil shipments.
Statoil (NYSE: STO), Norway’s largest oil company, signed a partnership with OAO Rosneft, Russia’s largest oil company, that will see the two oil giants partner in the search for crude in Russia’s oil-rich Arctic region. Statoil’s Russian accord is similar in nature to the ones Rosneft recently inked with Exxon Mobil (NYSE: XOM) and Eni SpA (NYSE: E), the largest U.S. and Italian oil firms.
Kuwait Gulf Oil, that country’s state-run oil producer, said it plans to boost oil production by 100,000 barrels a day to 350,000 barrels a day by 2014-15. Tullow of the U.K. said it found more oil in a well in Kenya and will continue testing there to see if the well is commercially viable.