Investing.com - Crude oil futures tumbled on Monday to hit the lowest level in almost three months as growing fears of a messy Greek exit from the euro zone dampened demand for growth-linked assets.
On the ICE Futures Exchange in London, Brent oil for August delivery hit an intraday low of $58.28 a barrel, a level not seen since April 10, before trading at $58.72 during U.S. morning hours, down $1.60, or 2.66%.
Elsewhere, on the New York Mercantile Exchange, crude oil for August delivery lost $1.27, or 2.29%, to trade at $54.25 a barrel after touching a daily low of $53.93, the weakest level since April 14.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $4.47 a barrel, compared to $3.39 by close of trade on Thursday.
The latest reports from Greece said around 62% of those voting in the referendum had backed the government and rejected the bailout conditions. The result of the referendum has added to doubts over Greece’s future in the euro zone and deepened a standoff with its lenders.
Greek Prime Minister Alexis Tsipras welcomed the outcome of the vote and said Athens was returning to bailout negotiations with the express goal of reopening banks, which have been shut for over a week after capital controls were imposed.
Without more emergency funding from the European Central Bank, Greece's banks are facing a cash crunch within days. The ECB was to discuss whether to maintain emergency funding for Greek banks at their current restricted level later Monday.
In a surprise move, Greek Finance Minister Yanis Varoufakis resigned on Monday, despite the referendum results. In a statement, Varoufakis said his decision was prompted in part by “some European participants” expressing a desire for his part in any further negotiations to end.
His replacement was expected to be named after a meeting of Greek political leaders later Monday.
German Chancellor Angela Merkel and French President Francois Hollande were set to meet in Paris on Monday afternoon, while euro zone leaders were expected to hold a conference on Tuesday night to discuss the aftermath of the Greek referendum.
European officials have indicated that they will only continue to finance Greece in return for far-reaching economic reforms.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.35% to hit a one-month high of 96.71, boosted by a weaker euro.
A stronger dollar makes U.S. commodities more expensive for importers holding other currencies such as yen or euro.
The euro was down 0.75% to 1.1031 on Monday while European stock markets sank and the yields on Italian, Spanish and Portuguese bonds spiked amid heightened fears of a messy Greek exit from the euro zone.
Oil futures plunged last week after Baker Hughes (NYSE:BHI) reported that the number of U.S. oil-drilling rigs rose by 12 to 640 last week, snapping 29 straight weeks of declines.
The report came after data on Wednesday showing an unexpected increase in U.S. oil stockpiles in the previous week, on the back of increased production.
Investors were also eyeing nuclear talks between the West and Iran, which could push millions of barrels of crude into the oversupplied world market.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.