MW: Crude falls for second session as economic worries persist
NEW YORK (MarketWatch) -- Crude-oil futures fell Monday for a second session, dropping below $69 a barrel as worries about fragility in the economic recovery and weakness in energy demand dominated market sentiment.
Crude for November delivery dropped $1.60, losing 2.3% to stand at $68.35 a barrel on the New York Mercantile Exchange. Monday's loss came after crude had rallied 6% over the course of last week.
"Energy prices have moved lower ... as global demand appears to be the primary concern facing the market," said Brian Niemiec, analyst at Susquehanna Financial Group.
"New tensions with Iran and Nigeria's violence have not had a strong effect on crude prices, largely due to excess levels of supply and the questions surrounding global demand."
Monday's selling prevailed in the face of data from the Institute for Supply Management, which said its index of the services industry rose to 50.9% in September, the highest level since May 2008 and topping analysts' consensus of 50%. Readings above 50% in the diffusion index indicate more firms are expanding than contracting. See full story.
Investors also will turn their attention to third-quarter company earnings reports for clues about the U.S. economy. Alcoa Inc. (AA 13.22, +0.40, +3.11%) is expected to kick off the earnings season on Wednesday.
"We suspect that with U.S. macro numbers taking a turn for the worst, the path of least resistance in a variety of energy complexes will be lower over the coming weeks," said Edward Meir, analyst at MF Global, in a note to clients.
In Nigeria, Africa's biggest oil producer, President Umaru Yar'Adua has clinched in recent days a flurry of last-minute deals with militants to accept a government amnesty, Dow Jones Newswires reported.
However, it's still too early to determine whether the deals will translate into lasting peace in the Niger Delta, the source of most of the country's oil wealth.
In other energy trading, November reformulated gasoline fell 4.59 cents, or 2.6%, to $1.695 a gallon and November heating oil dropped 5.1 cents, or 2.9%, to $1.7455 a gallon.
However, November natural-gas futures rose 25.5 cents, or 5.4%, to $4.97 per million British thermal units.
Among exchange-traded funds, the United States Oil Fund (USO 35.33, -0.54, -1.51%) lost 1.3% as the United States Natural Gas Fund rallied (UNG 12.00, +0.61, +5.36%) 4%.
On Wall Street, stocks moved broadly higher on the heels of the upbeat ISM services survey.
