Investing.com - Crude oil futures fell to the lowest level since mid-December during European morning trade on Monday, as investors continued to cut their exposure to growth-linked assets amid fears that ongoing political turmoil in Greece could result in the county’s eventual exit from the euro zone.
On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at USD94.90 a barrel during European morning trade, tumbling 1.3%.
It earlier fell by as much as 1.45% to trade at USD94.74 a barrel, the lowest since December 20.
Investors continued to monitor political developments in Greece, as the debt-laden country struggles to form a coalition government following last weekend’s elections, fanning fears over a potential default and eventual exit from the euro zone.
On Sunday, Alexis Tsipras the head of Greece’s largest anti-bailout party Syriza rejected an invitation from the country’s president to attend a last-ditch cross party talks, due to be held later in the day, fuelling fears that a fresh round of elections is unavoidable.
Parties have been unable to reach an agreement over whether Greece should continue to implement unpopular austerity measures demanded by the country’s international creditors in exchange for its EUR130 billion bailout agreement.
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 0.25% to trade at 80.62, the highest since March 16.
Fears over a deeper-than-expected slowdown in China also added to the selling pressure, after a flurry of data released late last week indicated that the world's second-largest economy was slowing faster than expected.
Oil traders shrugged off a policy easing move by the China’s central bank over the weekend.
The People’s Bank of China cut the Reserve Requirement Ratio, or the amount of cash that banks must hold as reserves, to 20.0% from 20.5%, effective May 18. It was the third cut in six months.
A deeper slowdown in China, the world’s second-biggest economy, would impair a global expansion that is already faltering because of Europe’s austerity measures.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery fell 0.9% to trade at 110.80 a barrel, with the spread between the Brent and crude contracts standing at USD15.90.
Prices came under pressure after Saudi Arabia’s Oil Minister Ali al-Naimi said earlier that the country would like the cost of Brent to fall to USD100 a barrel.
Mr. al-Naimi added that he would like to see global inventories rise before demand picks up in the second half of the year.
Brent crude, the European benchmark, is more than 13% 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 USD94.90 a barrel during European morning trade, tumbling 1.3%.
It earlier fell by as much as 1.45% to trade at USD94.74 a barrel, the lowest since December 20.
Investors continued to monitor political developments in Greece, as the debt-laden country struggles to form a coalition government following last weekend’s elections, fanning fears over a potential default and eventual exit from the euro zone.
On Sunday, Alexis Tsipras the head of Greece’s largest anti-bailout party Syriza rejected an invitation from the country’s president to attend a last-ditch cross party talks, due to be held later in the day, fuelling fears that a fresh round of elections is unavoidable.
Parties have been unable to reach an agreement over whether Greece should continue to implement unpopular austerity measures demanded by the country’s international creditors in exchange for its EUR130 billion bailout agreement.
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 0.25% to trade at 80.62, the highest since March 16.
Fears over a deeper-than-expected slowdown in China also added to the selling pressure, after a flurry of data released late last week indicated that the world's second-largest economy was slowing faster than expected.
Oil traders shrugged off a policy easing move by the China’s central bank over the weekend.
The People’s Bank of China cut the Reserve Requirement Ratio, or the amount of cash that banks must hold as reserves, to 20.0% from 20.5%, effective May 18. It was the third cut in six months.
A deeper slowdown in China, the world’s second-biggest economy, would impair a global expansion that is already faltering because of Europe’s austerity measures.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery fell 0.9% to trade at 110.80 a barrel, with the spread between the Brent and crude contracts standing at USD15.90.
Prices came under pressure after Saudi Arabia’s Oil Minister Ali al-Naimi said earlier that the country would like the cost of Brent to fall to USD100 a barrel.
Mr. al-Naimi added that he would like to see global inventories rise before demand picks up in the second half of the year.
Brent crude, the European benchmark, is more than 13% 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.