Crude oil prices plunged nearly 3% on Monday amid worries the swine flu outbreak could hinder the economy's recovery.
Light sweet crude for June delivery dropped to $50.14, down $1.41 on the session. Prices hit as low as $48.01 earlier in the morning.
The number of confirmed swine flu cases in the U.S. reached 40, although the reported cases still remain relatively mild and do not appear to be life-threatening. The Center for Disease Control addressed the situation Monday in a press conference, urging Americans to postpone unnecessary travel plans to Mexico.
Additional concerns were raised as Lawrence Summers, director of the White House National Economic Council, stated that he expects the U.S. economy will continue to decline for some time to come in an interview on Fox News Sunday. Summers also said that it was clear that there were going to be sharp declines in employment for quite some time this year.
There was no major economic news on Monday, leaving traders to sift through the latest on the earnings front. Investors also looked ahead to the Federal Open Market Committee's two day meeting, which begins on Tuesday and will conclude with an interest rate decision on Wednesday.
Traders also looked ahead to the Energy Information Administration's weekly inventory report. Last week, EIA data showed U.S. commercial crude oil inventories increased by 3.9 million barrels in the week ended April 17. Experts were looking for a build of about 3 million barrels for the week. At 370.6 million barrels, inventories are at the highest level in almost 19 years.
Total motor gasoline inventories increased by 800,000 barrels last week. Distillate fuel inventories increased by 2.7 million barrels and propane/propylene inventories increased by 600,000 barrels.
Oil rallied $1.93 on Friday as encouraging earnings news from Ford (F) fueled hopes for improved energy demand.
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