“The European situation continues to be a drag on the market,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “There are elections this weekend that could have a major impact on policy. The U.S., which had been holding up pretty well, is starting to show cracks.”
The Standard & Poor’s 500 Index declined 1.6 percent. The Standard & Poor’s GSCI Index of 24 commodities fell 2.4 percent, led by crude.
Oil in New York climbed to a five-week high of $106.43 in intraday trading May 1 after a report showed that U.S. manufacturing increased at the fastest pace in 10 months.
“Volatility has returned to the market,” Greely said. “We’re going to remain in a choppy range through the second quarter and then move higher in the second half of the year as the U.S. and Chinese economies improve.”
The fall in prices accelerated after crude broke through technical support along its 100-day moving average, at $102.36 a barrel today, data compiled by Bloomberg showed. Buy and sell orders tend to be clustered near chart-support levels. Futures settled below the average for only the second time since Oct. 21. They were a penny under the indicator on April 4.
U.S. crude stockpiles increased 2.84 million barrels to 375.9 million in the seven days ended April 27, the most since September 1990, according to an Energy Department report May 2. Domestic output gained 8,000 barrels a day to 6.12 million, the highest level since November 1999.
Gasoline consumption fell 0.3 percent to an average 8.66 million barrels a day in the four weeks ended April 27, leaving demand 4.7 percent lower than a year earlier.
“We’re now focused on weak demand and high inventory levels,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Sobriety has returned to the market with Iran tension easing. Oil above $100 is not sustainable with the economy in this condition.”
Oil in New York has fallen 11 percent from a March 1 intraday peak of $110.55 a barrel as tensions have eased between Iran and Western nations over the country’s nuclear program.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.