Investing.com - Crude oil futures fell to the lowest level since November during European morning trade on Wednesday, as investors continued to cut their exposure to growth-linked assets after efforts to form a new government in Greece collapsed.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD92.05 a barrel during European morning trade, plunging 2.05%.
It earlier fell by as much as 2.4% to trade at USD91.81 a barrel, the lowest since November 3, 2011.
Oil futures have been on a rapid decline since the outcome of the May 6 elections in Greece threw the future of the country’s international bailout deal into doubt and fuelled fears over a possible Greek exit from the euro zone.
The June WTI contract has lost nearly 6.5% over the past eight trading sessions.
Speculation over the possibility of a Greek exit from the euro zone intensified on Tuesday, as talks aimed at forming a coalition government failed.
A caretaker government will be appointed later Wednesday, with new elections likely in early June, fuelling fears over a potential Greek default and eventual exit from the euro zone.
Reports that Greeks have withdrawn as much as EUR700 million from the nation’s banks since the outcome of the elections further added to the gloomy environment.
Further weighing on sentiment, Spanish 10-year yields traded at 6.48%, the highest since late-November and fast approaching the unsustainable 7%-level. Similar-maturity Italian yields increased to 5.95%, after touching 6% for the first time since January.
There are worries that the region’s sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil. The euro zone accounted for nearly 12% of global oil consumption in 2010, according to data from British Petroleum.
The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.23% to trade at 81.62, the highest since January 16.
Meanwhile, oil traders were looking ahead to the U.S. Energy Information Administration’s closely-watched weekly report on U.S. stockpiles of crude and refined products later in the day.
The report was expected to show that U.S. crude oil stockpiles rose by 1.73 million barrels last week to the highest level since August 1990, underscoring fears over a slowdown in oil demand from the U.S.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 6.6 million barrels last week, far outpacing analysts' expectations of a rise of 1.7 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery was down 1.45% to trade at 109.86 a barrel, with the spread between the Brent and crude contracts standing at USD17.81.
Brent crude, the European benchmark, is more than 14% off its intraday high of USD128.38 hit on March 1.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
But revived talks between Iran and major powers over Tehran's nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs of slower U.S. economic and employment growth, helped pull oil prices back from first-quarter highs.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD92.05 a barrel during European morning trade, plunging 2.05%.
It earlier fell by as much as 2.4% to trade at USD91.81 a barrel, the lowest since November 3, 2011.
Oil futures have been on a rapid decline since the outcome of the May 6 elections in Greece threw the future of the country’s international bailout deal into doubt and fuelled fears over a possible Greek exit from the euro zone.
The June WTI contract has lost nearly 6.5% over the past eight trading sessions.
Speculation over the possibility of a Greek exit from the euro zone intensified on Tuesday, as talks aimed at forming a coalition government failed.
A caretaker government will be appointed later Wednesday, with new elections likely in early June, fuelling fears over a potential Greek default and eventual exit from the euro zone.
Reports that Greeks have withdrawn as much as EUR700 million from the nation’s banks since the outcome of the elections further added to the gloomy environment.
Further weighing on sentiment, Spanish 10-year yields traded at 6.48%, the highest since late-November and fast approaching the unsustainable 7%-level. Similar-maturity Italian yields increased to 5.95%, after touching 6% for the first time since January.
There are worries that the region’s sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil. The euro zone accounted for nearly 12% of global oil consumption in 2010, according to data from British Petroleum.
The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.23% to trade at 81.62, the highest since January 16.
Meanwhile, oil traders were looking ahead to the U.S. Energy Information Administration’s closely-watched weekly report on U.S. stockpiles of crude and refined products later in the day.
The report was expected to show that U.S. crude oil stockpiles rose by 1.73 million barrels last week to the highest level since August 1990, underscoring fears over a slowdown in oil demand from the U.S.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 6.6 million barrels last week, far outpacing analysts' expectations of a rise of 1.7 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery was down 1.45% to trade at 109.86 a barrel, with the spread between the Brent and crude contracts standing at USD17.81.
Brent crude, the European benchmark, is more than 14% off its intraday high of USD128.38 hit on March 1.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
But revived talks between Iran and major powers over Tehran's nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs of slower U.S. economic and employment growth, helped pull oil prices back from first-quarter highs.