WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange accelerated early losses in afternoon trade Monday, sending the U.S. crude benchmark down more than 4% as market participants weighed increased production from the Organization of the Petroleum Exporting Countries, Russia and allied producers against stronger-than-expected economic data in the United States countered by muted demand growth in the European Union and emerging markets.
At settlement, NYMEX May West Texas Intermediate futures tumbled $2.80 to $58.65 barrel (bbl) and the June Brent contract on ICE declined to $62.15 bbl, down $2.71 on the session. NYMEX May ULSD futures plummeted 5.92 cents or 3% to $1.7724 gallon and NYMEX RBOB May futures fell 6.12 cents for a $1.9611 gallon settlement.
At the beginning of a holiday-shortened week for European traders, oil futures dropped sharply amid growing concern inventories would build amid a muted recovery in global oil demand and rising production levels from OPEC+ when producers taper output cuts beginning in May. The prospect for additional oil supply in the United States further pressured oil prices, with Baker Hughes last week reporting domestic producers added 13 oil rigs, lifting the active number of rigs targeting oil to a one-year high 337.
Recent economic data from the United States offers bullish optimism, with business activity in U.S. services industries jumping to a record-high reading of 63.7% in March, according to the Institute of Supply Management, benefiting from states easing COVID-19 restrictions and an accelerated pace of daily vaccinations. The United States is now averaging close to three million vaccinations a day, with four million vaccines administered on Saturday, according to the Centers for Disease Control and Prevention.
The better-than-expected performance in services follows a blowout month for manufacturing industries, with goods-producing industries hitting a 37-year high reading of 64.7% in March.
The economy added 916,000 jobs last month in the strongest indication yet that the labor market is poised to continue a healthy expansion. The employment data, released Friday by the Bureau of Labor Statistics, firmly beat economist predictions of 675,000 positions.
Despite upbeat data in the United States, recovery in global oil demand is still far from certain with India, China and the European Union reporting new spikes in infections.
Liubov Georges can be reached at email@example.com