Brent crude oil fell below $115 a barrel on Monday, heading for its first monthly decline this year, as investors weighed the prospect that Europe's debt crisis and a sputtering US economy may slow demand. Public holidays in the United States and the UK on Monday kept trading volume at less than 5 percent the daily norm.
The US driving season, The US Memorial Day holiday weekend marks the official beginning of summer driving season, when gasoline demand usually rises. Brent crude slipped 35 or 0.3 percent cents to $114.54 a barrel by 2022 GMT, having held above the first technical support level of $114. Prices are down 9 percent for the month of May, the biggest decline since May of last year.
US crude dropped 21 cents to $100.38 in late trading. The New York Mercantile Exchange will not issue a settlement price on Monday, with all trading registered for May 31. "Trading volume is very thin with the UK and US markets not in. The only factor that I can see is a slightly firmer US dollar, which may put pressure on prices," said Carsten Fritsch, analyst at Commerzbank.
Chairman of eurozone finance ministers, Jean-Claude Juncker, expressed optimism over further aid to Athens after meeting with French President Nicolas Sarkozy in Paris as the European Union raced to draft a second bailout package for Greece to avert the risk of a defult.
The euro eased on Monday, pulling away from a key chart resistance as uncertainty over how Greece's debt crisis will be tackled kept investors on edge, while the dollar stabilised following a slide late last week. A stronger dollar can reduce investor demand for dollar-denominated commodities such as oil.
Oil traders remained focused on gasoline. Gasoline futures soared on Friday in anticipation of higher demand this summer, but gains were limited as a plunge in US home sales added to worries about the pace of US economic recovery. RBOB futures added 0.1 percent on Monday.
A US government report last week showed gasoline demand over the previous four weeks was down 2.1 percent on the year and inventories rose more than expected. Nonetheless, some analysts see potential for prices to gain strength. "There are expectations of prices picking up purely because of the drive time in the US," said Jonathan Barratt of Commodity Broking Services in Sydney. "We feel that might actually support crude prices."
Brent crude is up about 20 percent this year, boosted by fighting in Libya that has halted its oil exports and unrest in North Africa and the Middle East. High energy costs have sparked global concern as they are a drag on economic growth. While the conflict in Libya has almost shut down oil output in what used to be Africa's third-largest producer, supply from all 12 members of Opec is expected to rise in May, according to a Reuters survey on Friday.
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