* Fitch downgrade of Spain credit rating weighs on markets
* U.S. crude down 14 pct for month of May
* Coming up: ISM manufacturing index, June 1, 10 a.m. EDT
(Recasts, updates prices, market activity to settlement)
By Robert Gibbons
NEW YORK, May 28 (Reuters) - U.S. crude oil futures ended
lower on Friday, posting their worst monthly loss since
December 2008, as a downgrade of Spain's credit ratings and
disappointing U.S. economic data fueled investor caution about
riskier assets.
Fitch Ratings downgraded Spain's credit ratings by one
notch on Friday, saying the country's economic recovery will be
"more muted" than government forecasts due to austerity
measures. []
The ratings downgrade pressured oil that had already
retreated from a two-week high above $75 per barrel on
disappointing U.S. economic data.
"Oil futures are down a lot and it's all because of the
news of Fitch downgrading Spain's credit rating. Ahead of the
long weekend, crude futures have latched on to the stock market
which is falling on euro-zone worries," said Mark Waggoner,
president at Excel Futures in Bend, Oregon.
U.S. crude futures for July delivery <CLc1> fell 58 cents,
or 0.78 percent, to settle at $73.97 a barrel, having traded as
low as $73.13 after reaching an early $75.72 high .
Front-month crude fell $12.18, or 14.1 percent in the month
of May, the biggest monthly percentage loss since December,
2008, when prices fell 18.1 percent.
London's ICE Brent crude <LCOc1> fell 64 cents to settle at
$74.02, trading in a range from $73.28 to $75.74. Front-month
Brent crude was down $13.42, or 15.4 percent for the month, the
biggest monthly percentage decline since November, 2008,
Oil markets had expected some volatility with U.S. June
refined products futures contract expiring on Friday.
U.S. stocks ended lower, finishing their worst month in
over a year after Spain's credit rating downgrade put euro-zone
debt issues back into focus. []
The euro fell across the board after the downgrade. []
U.S. consumer spending was unexpectedly flat in April, even
though real disposable incomes had their biggest increase in
nearly a year, the Commerce Department said. []
The Institute for Supply Management-Chicago said its index
of Midwest business activity fell in May. Business activity
grew less than expected as employment declined.
[]
U.S. consumer sentiment rose slightly in May from April but
stayed near levels reported since February, while the one-year
inflation expectations climbed to the highest since October
2008, a Thomson Reuters/University of Michigan's Surveys of
Consumers report said. []
Oil prices have been extremely volatile in May. U.S. crude
hit an intraday low of $64.24 on May 20, ahead of the expiry of
the June futures contract, almost $23 below its peak at $87.15
on May 3, its level highest for 19 months.
This volatility has left investors cautious, though some
oil traders argue the market may have found a floor.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic of U.S. crude oil futures benchmark over the last
year:
http://link.reuters.com/nuv86k
Graphic of crude vs euro/dollar:
http://link.reuters.com/duw86k
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A Reuters survey on Friday showed the Organization of the
Petroleum Exporting Countries's oil supply up in May to the
highest in 17 months, suggesting a price slide has yet to spur
closer adherence to agreed output targets. []
Traders are keeping an eye on forecasts for the Atlantic
hurricane season that have revived concerns of disruption to
supplies in the Gulf of Mexico, where BP <BP.L> was trying to
plug a gushing oil well.
In its first outlook for the Atlantic hurricane season that
begins on June 1, the U.S. National Oceanic and Atmospheric
Administration forecast 14 to 23 named storms, with eight to 14
hurricanes, nearly matching 2005's record 15. []
Hurricanes Katrina and Rita devastated offshore Gulf of
Mexico oil production and Gulf Coast refineries in 2005.
The coming Memorial Day weekend is the traditional start of
the U.S. summer driving season, when motor fuel demand usually
increases. U.S. diesel fuel demand for trucking and industry is
rising, a weekly government report showed on Wednesday.
Oil demand in the U.S. climbed almost 7 percent over the
past four weeks, the U.S. Energy Information Administration
said, led by a 16 percent jump in demand for distillates, a
category that includes diesel fuel and heating oil.
(Additional reporting by Gene Ramos in New York, Christopher
Johnson in London and Alejandro Barbajosa in Singapore; Editing
by Sofina Mirza-Reid)
