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Oil fell as the U.S. economy expanded less than forecast in the first quarter and a cut in Spain’s credit rating renewed concern that Europe’s faltering economy may curb fuel demand.
Futures dropped as much as 0.8 percent after the Commerce Department said gross domestic product rose at a 2.2 percent annual rate following a 3 percent pace. The median forecast of economists surveyed by Bloomberg called for a 2.5 percent gain.
Standard & Poor’s reduced Spain’s credit rating yesterday for the second time this year. Spain’s sovereign credit rating was reduced by two levels, to BBB+ from A, with a negative outlook, New York-based S&P said in a statement yesterday. The country’s short-term rating was cut to A-2 from A-1.
The European sovereign debt crisis that began in Greece and then moved to Ireland, Portugal, Italy and Spain has reduced economic growth in the euro region.
Crude oil for June delivery dropped to $104.14 a barrel on the New York Mercantile Exchange. Futures are up 1.2 percent this week and have increased 5.5 percent this year.
Brent oil for June settlement slipped 36 cents, or 0.3 percent, to $119.56 a barrel on the London-based ICE Futures Europe exchange.
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