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Crude oil futures under pressure amid global demand concerns

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Shutterstock photo - Crude oil futures came under heavy selling pressure on Thursday, as concerns over the global economic outlook and the impact on future oil demand prospects dampened the appeal of the commodity.

Oil prices also struggled due to a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD93.41 a barrel during European morning trade, down 0.9% on the day.

New York-traded oil prices fell by as much as 1% earlier in the day to hit a session low of USD93.36 a barrel. Nymex oil fell to a two-week low of USD92.16 a barrel on Wednesday, before erasing most losses to end little changed.

Official data on Wednesday showed that the euro zone economy contracted by 0.2% in the first quarter, bringing the annualized rate of contraction to 0.9%.

Germany's economy posted growth of 0.1%, below expectations for a 0.3% increase, while the French economy contracted by a larger than expected 0.2%.

The 17 countries using the euro accounted for about 12% of world demand last year.

Meanwhile, in the U.S., data showed that industrial production fell by 0.5% in April, more than forecasts for a 0.2% drop.

A regional manufacturing barometer in the U.S. disappointed as well.

The Federal Reserve Bank of New York's Empire State manufacturing index slid to -1.4 in May, from a reading of 3.1, disappointing expectations for a rise to 4.0.

The U.S. is the world's largest oil consuming nation and manufacturing numbers are used as indicators for fuel demand growth.

A broadly stronger U.S. dollar also weighed. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 84.08.

On Wednesday, the gauge hit the highest level since July after a string of disappointing economic indicators in the U.S. and Europe sparked safe-haven demand for the liquid greenback.

Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery shed 0.5% to trade at USD102.56 a barrel, with the spread between the Brent and crude contracts standing at USD9.15 a barrel.

The gap between the contracts narrowed to the lowest level since January 2011 earlier in the week, amid an improving production outlook in the North Sea and indications of declining stockpiles at Cushing, Oklahoma, the delivery point for Nymex oil futures. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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