Wall Street's S&P 500 stock market index looked to be on track for
its biggest three-day drop in two months, pushed down by shares of
fast-growing industries, or momentum shares, and by disappointment
with U.S. jobs data issued on Friday.
U.S. and Brent crude also took a hit on Monday from an agreement by
Libyan rebels occupying four eastern oil ports to end an eight-month
blockade. The Zueitina oil port said it was ready to load crude as
early as Monday.
Brent was down $1.50 and West Texas Intermediate (WTI) by more than
a dollar at one point but towards the end of the day both pared
losses. Brent settled at $105.82, down 90 cents, and WTI at $100.44,
down 70 cents.
"Once we get to a point where short-term traders don't think we're
going to make new lows, there's a short-term amount of profit-making
that comes into the market," said Tim Evans, an analyst at Citi
"In terms of the fundamentals, the big debate is whether this deal
to re-open the Libya oil ports is truly going to hold and how much
production will come back on line and how soon."
Under the deal thrashed out over the weekend, Libya's Zueitina and
Hariga ports, held by federalist rebels demanding more autonomy from
Tripoli, are to open almost immediately.
The larger ports of Ras Lanuf and Es Sider will be freed up in two
to four weeks after more talks. The end to the port standoff is
removing some supply worries that had helped push prices as high as
Brent swung between a low of $105.13 and a high of $106.63, while
U.S. crude traded between $99.92 and $101.32, which analysts said
reflected investor uncertainty about the Libyan deal holding. The
fall in oil prices snapped a two-day rise.
Losses in oil were checked by renewed tensions over the weekend in
Ukraine, which raised concerns about the possibility of a deeper
diplomatic rift between Russia and the West.
Pro-Moscow protesters in eastern Ukraine seized arms in one city and
declared a separatist republic in another in moves Kiev described on
Monday as part of a Russian-orchestrated plan to justify an invasion
to dismember the country.
[to top of second column]
Crude oil may come under further pressure in the coming days when
Iran and six world powers hold new talks in Vienna, intending to
reach agreement by July 20 on how to resolve the decade-old standoff
over Iran's nuclear program.
Iran said it hopes to make enough progress in the talks for
negotiators to start drafting an agreement by mid-May. Sanctions
against Tehran have kept much Iranian oil off international markets.
"If they make more progress (in talks), it could be very bearish.
Iran is itching to sell more oil and the market is thinking
bearishly. Every meeting is closer to when Iran's oil is back in the
market," Flynn said.
Focus will also be fixed on U.S. crude oil inventory data, with
American Petroleum Institute numbers coming out on Tuesday and
Energy Information Administration figures being released on
Analysts polled by Reuters expect a 1.9 million barrel build in
crude oil stocks against a 2.4 million barrel drop in the previous
week, with an 800,000-barrel draw on gasoline and a 300,000-barrel
fall in distillate inventories.
(Additional reporting by Anna Louie Sussman in New York, by
Christopher Johnson in London, Manash Goswami in Singapore; editing
by Jason Neely, Jane Baird, David Evans, Andrew Hay, Peter Galloway
and Paul Simao)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.