UPDATE 8-Oil dips on Spain recession, weak U.S. data

Mon Apr 30, 2012 4:13pm EDT

Related Topics

* Spanish economy falls into recession, weighs on oil
    * U.S. Midwest business activity gauge weakens
    * OPEC output at highest level since 2008-Reuters survey
    * Coming up: API oil data 4:30 p.m. EDT Tuesday

 (Recasts, updates prices to settlement)	
    By Robert Gibbons	
    NEW YORK, April 30 (Reuters) - Oil prices edged lower on
M onday in tug-of-war trading as Spain's fall into recession and
slowing U.S. Midwestern business activity countered supportive
expectations for more Federal Reserve action to stimulate a
sluggish U.S. economy.	
    U.S. crude's 6-cent price dip snapped a string of six higher
settlements, but still allowed front-month crude to post a 1.8
percent monthly gain.	
    Brent ended April with a nearly 3 percent loss, after three
straight monthly gains.	
    Brent's premium to U.S. crude has been lowered by reduced
tensions about Iran's nuclear program after talks with major
powers restarted mid-month and by an upcoming U.S. pipeline
reversal expected to relieve a bottleneck and high Midwest
inventories that have hemmed in U.S. crude prices.	
    Brent June crude fell 36 cents to settle at $119.47
a barrel, having traded from $118.73 to $119.79. For the month,
Brent fell $3.41 or 2.78 percent.	
    U.S. June crude dipped 6 cents to settle at $104.87,
after recovering from a $103.88 low and reaching $105.16 a penny
below the 50-day moving average (MA) of $105.17.	
    U.S. crude prices have met resistance near the 50-day MA
after finding support intraday near the 100-day MA early last
week.	
    The Brent-U.S. crude spread CL-LCO1=R narrowed 30 cents to
$14.60 based on settlements, after Brent's premium reached
$15.37 intraday.	
    Total Brent crude trading volume narrowly outpaced U.S.
turnover, but volumes were light for both and they lagged their
30-day averages by more than 20 percent.	
    Trading volumes were expected to be reduced ahead of the May
Day bank holiday across much of Europe on Tuesday. 	
    Expiring U.S. May RBOB gasoline slipped and went off
the board at $3.1844 a gallon, only 0.02 cent above May heating
oil, which managed to end the day higher.	
    U.S. gasoline posted a 6 percent loss for the month, the
first monthly loss for the month of April since the late 2005
launch of the RBOB contract.	
    Travel group AAA on Monday pegged the U.S. average gasoline
price at $3.816 per gallon, down more than 4 cents in a week and
off nearly 11 cents from a month ago.	
    James Zhang, energy analyst at Standard Bank, said the
market was in a cautious mood ahead of a heavy week for U.S.
data releases.	
    "The market is undecided, but if anything there is a
slightly bearish bias given that the weekly U.S. jobless
(claims) report has disappointed over the last few weeks. That
potentially points to a downbeat nonfarm payroll report on
Friday," he said.	
    But he added that signs of weakness in U.S. data also raise
the possibility of another round of monetary easing, seen as
supportive to dollar-denominated commodities.	
    Investors await Friday's U.S. April nonfarm payrolls report
after last week's slower-than-expected U.S. first quarter GDP
reading reinforced expectations that the Fed might ease monetary
policy further to stimulate a sputtering recovery.	
    A recovery in the dollar index on Monday, after it
hit a two-month low, and a survey result pointing to OPEC crude
oil production rising to the highest level since 2008 also
weighed on oil prices.    	
    	
    SLOWING ECONOMIC GROWTH	
    Spain fell into recession in the first quarter and
economists said austerity measures to meet strict EU deficit
limits and a reeling bank sector would delay a rebound until
late 2012 or beyond. 	
    Also weighing on oil prices, a gauge of Midwestern business
activity fell sharply and U.S. consumers boosted spending only
modestly in April. 	
 	
    	
    OPEC OUTPUT RISING	
    OPEC output in April hit its highest level since 2008, a
Reuters survey found on Monday. 	
    Increased output from Iraq, Saudi Arabia and Libya more than
compensated for the lowest Iranian supply in two decades ahead
of a European Union embargo on Tehran's oil set for July,
according to the survey.	
    Rising crude oil stockpiles in the United States, the rest
of OPEC's ability to make up for sanctioned Iranian crude and
easing U.S. gasoline pump prices may lessen the urgency for
plans for release of Western strategic petroleum reserves.	
	
 (Additional reporting by Claire Milhench in London and Florence
Tan in Singapore; Editing by Marguerita Choy and Sofina
Mirza-Reid)
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