Oil prices fell below $100 a barrel Monday amid fresh signs of slowing U.S. economic growth and ahead of a meeting of the OPEC oil cartel, where a production increase may be up for discussion.
By early afternoon in Europe, benchmark oil for July delivery was down $1.02 to $99.20 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 18 cents to settle at $100.22 on Friday.
In London, Brent crude for July delivery was down $1.25 to $114.59 a barrel on the ICE Futures exchange.
Investors will be closely watching Wednesday’s meeting of the Organization of Petroleum Exporting Countries in Vienna. The 12-member cartel, which produces about 40 percent of global crude supplies, will be debating whether to boost production to help lower prices.
“The debate about a possible quota increase should weigh on prices ahead of the OPEC meeting,” said analysts at Commerzbank in Frankfurt. “Speculative financial investors appear to be calculating more on the possibility of an increase of production quotas.”
Traders are also gauging the impact of a weaker U.S. economy on consumer spending. The Labor Department said Friday the U.S. added 54,000 jobs in May, the fewest in eight months. During the previous three months, the economy added an average of 220,000 jobs per month.
“We are focusing our attention on the OPEC meeting and the fallout from Friday’s jobs data,” energy consultant The Schork Report said. “Last week issued daily telltales that the pace of the U.S. economic recovery is in serious doubt.”
Offsetting some of the negative impact from the U.S. jobs data and the upcoming OPEC meeting was the weak dollar, which makes commodities like crude cheaper for investors holding other currencies and usually helps boost prices.
On Monday, the euro was trading near one-month highs of $1.4608. Earlier, it struck its highest level since May 5 of $1.4652.
“While dollar-induced buying could lift commodities over the short-term, it seems to us that such an advance will not be easy to sustain given the backdrop of weaker growth,” said Edward Meir of MF Global in New York. “At some point, markets will have to disregard the impact of the currency and focus on the fact that slowing economies will reduce commodity demand and put upward pressure on inventories.
In other Nymex trading in July contracts, heating oil fell 2.57 cents to $3.031 a gallon and gasoline dropped 2.4 cents to $2.9691 a gallon. Natural gas futures gained 7.6 cents to $4.783 per 1,000 cubic feet.