Oil makes deepest monthly drop in three years

05 June 2012, Sweetcrude, HOUSTON – CRUDE oil futures dropped by more than one per cent, ending May with their biggest monthly decline in more than three years as bloated US stockpiles and weak economic data added to worries about the euro zone crisis.

In London, ICE Brent crude futures for July delivery settled at $101.87, down $1.60, the lowest finish for front-month Brent since 4 October.

Front-month Brent fell 14.7% for the month, its biggest monthly decline since December 2008, after slipping 3%. Brent has fallen more than 21% from its 2012 high of $128.40 hit in March.

US crude for July delivery settled at $86.53, falling $1.29, and marking the lowest US front-month close since 20 October.

Front-month US crude sustained a 17.5% loss for May, its biggest monthly decline since December 2008. It has dropped more than 22% from its 2012 peak of $110.55 struck in March.

Oil pared sharp losses of more than 2% in afternoon trading after Dow Jones reported that the International Monetary Fund was considering a rescue loan to beleaguered Spain if it failed to bail out a big bank.

But IMF Managing Direcrtor Christine Lagarde later denied the report.

“There is no such plan. We have not received any request to that effect and we are not doing any work in relation to any financial support,” Lagarde said in a statement.

Fears about potential oil supply disruption and a new Mideast conflict as Iran resumed talks with world powers over its disputed nuclear program had kept oil futures range-bound in recent weeks.

But with growing signs of weakening growth in China, Europe and to some extent, the United States, investors have become leery of adding bullish bets on crude futures.

“The latest series of US data has snuffed out recent silver linings that had kept growth moving, though at a slow pace, and Europe is imploding,” Mark Anderle, a trader at TAC Energy in Dallas, told Reuters.

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