While total trading volume was two thirds below its norm because of the US holiday, sellers showed little hesitation in knocking Brent crude to its lowest in six days following the worst ever reading for Chinese services sector growth put into anxiety fueled on Friday by dismal US jobs information.
The continued closure of more than half the US Gulf of Mexico's crude oil production for any third day offered no visible support to the complicated, as companies slowly restored output after the passage associated with Tropical Storm Lee.
"The background is one of bad economic growth and worries over demand. The euro is under lots of pressure and equities have been weak all day, inch said Christopher Bellew, broker at Jefferies Bache in Birmingham.
ICE Brent futures for October fell $2. 25 in order to $109. 92 a barrel by 3: 30 EDT (1930 GMT), approaching the 200-day moving average support line at $109. twenty six. US crude futures dropped $2. 85 to $83. sixty one a barrel, putting the closely watched Brent/WTI spread at what will be a record close of $26. 31.
Volume was predictably slim, with Brent crude at only about 40% of it's average and US trading at 10%.
Oil was pulled lower with a drop in the euro, which pushed the US buck index up nearly 0. 6%, and a bank-led sell-off in European stocks that knocked the benchmark index down a lot more than 4%.
The catalysts were multiple: a regional election rout for German Chancellor Angela Merkel's coalition inside a state election on Sunday; an upcoming court ruling over Germany's involvement using the EU bailout fund on Wednesday; and new lawsuits and probes against big banks involved with asset-backed securities.
The mood in Europe was further eroded by data showing China's services sector grew in August in the slowest pace on record, a private survey showed upon Monday, as new orders ebbed and tightening measures to rein within an exuberant property sector started to pinch.
Global growth in services found a virtual standstill last month as new business basically dried up, adding to fears that the world economic climate is facing a double-dip recession. US service sector ISM data is likely to show the weakest reading since early 2010 on Wednesday.
"Oil is falling on worries over weak demand, unemployment and talk of the double-dip recession, " said Eugen Weinberg, head of goods research at Commerzbank in Frankfurt.
STORM WATCH
In the US Gulf, strong winds in the wake of Tropical Storm Lee hindered efforts to restaff and restart gas and oil platforms in the basin, grounding helicopters that would possess otherwise ferried workers out to platforms.
Shut crude essential oil production rose by 1. 2% on Monday to 858, 935 barrels daily after Lee dissipated over the southeastern United States, the federal government said.
Another storm, Hurricane Katia, intensified over the open up Atlantic on Sunday, bulking up to a powerful Class 2 storm, the US National Hurricane Center said, even though it appeared to pose little threat to energy facilities along with most models showing it veering back out to ocean.
SANCTIONS AND RECOVERY
The European Union imposed a prohibit on purchases of Syrian oil on Saturday and cautioned of further steps unless President Bashar al-Assad's government finished its crackdown on dissent. The measure was expected to possess minimal impact on the oil market as Syria exports no more than 150, 000 bpd.
In Libya, soldiers supporting the new interim government made prepared to storm a town held by loyalists of Muammar Gaddafi, but held off within the hope a surrender would avoid bloodshed.
The EU offers lifted sanctions on Libyan ports and oil firms, but output is likely to recover slowly, with many officials expecting it to go back to its its pre-war production level of around 1. 6 zillion bpd only in 2013.