U.S. crude-oil futures slumped Monday as political uncertainty in Europe coupled with disappointing data stung equities markets and signaled that falling oil demand is likely to continue.
Light, sweet crude oil for June delivery settled 77 cents, or 0.7%, lower at $103.11 a barrel on the New York Mercantile Exchange, after falling as low as $101.82 earlier in the session.
Brent crude oil on the ICE futures exchange ended 5 cents lower at $118.71 a barrel.
Oil prices fell in tandem with stock markets after data showed that French business activity in April dropped to the lowest level in six months and that a measure of German manufacturing showed the steepest contraction in the sector since July 2009.
The resignation of the Netherlands' prime minister and cabinet over failed budget talks, along with the first-place finish in France of Socialist candidate Francois Hollande in the first round of the country's presidential election, raised concerns about Europe's ability to deal with the debt crisis.
Declines in equities have weighed on crude-oil prices in recent weeks, as investors see it as a signal that economic growth--and demand for oil--may slump.
"They got pounded again today in Europe," said Kurt Kinker of Mirus Futures in Chicago, adding that pessimism has trickled into U.S. stocks and commodities markets. "It's kind of like everybody over there is throwing their hands up, and saying, What do we do?"
The Stoxx Europe 600 fell 2.5%. The Dow Jones Industrial Average was recently down 115 points, or 0.9%, to 12914.
Oil prices have remained in a tight range since the beginning of April, holding between $100 and $105 a barrel. With talks between Iran and the West easing tensions in the region, investors are focusing on how an economic slowdown in Europe and slower growth in China will affect global oil use.
"The oil market is using the stock-market indices as a guide to how strong demand may be," said Phil Flynn, an energy analyst at PFGBest in Chicago. "From the economic numbers, the market is more nervous about the demand side of the equation."
Front-month May reformulated gasoline blendstock, or RBOB, settled 4.46 cents, or 1.4%, higher at $3.1873 a gallon. May heating oil settled 0.22 cent higher at $3.1398 a gallon.