Commodities: Recovery fears drive down oil

Date: Monday 24 May 2010

Oil prices fell on Friday as concern about the eurozone debt crisis and its potential impact on the global economy drove down buyer appetite.

Crude for July delivery, which became the most active contract on Friday, fell 76 cents to settle at $70.04 a barrel on the New York Mercantile Exchange.

Oil prices did enjoy short-lived gains as traders tracked an advance on Wall Street, led by bargain hunters and financial stocks, but by afternoon trading gains slipped away.

Investors continued to worry that economic volatility in Europe will reduce demand for oil while there also concern about excess US stockpiles. Data earlier in the week from the US Energy Information Administration showed buoyant weekly oil supplies.

Otherwise there was some relief after the US Senate approved President's Obama's bill to overhaul the US financial markets. The Senate finally passed the Restoring American Financial Stability Act by 59 votes to 39 despite fierce opposition from financial companies and Republican senators. Obama said Americans would never again pay for Wall Street's mistakes.

Gold also settled lower on Friday as profit takers moved in on recent gains.

COMEX June gold futures contract closed down $12.50 Friday at $1176.10 an ounce on the Comex division of the New York Mercantile Exchange. Bullion traded between $1166 and $1188.

Silver for July delivery lost 6 cents to $17.65 an ounce while copper for July delivery added 12 cents to $3.0610 a pound.