Crude oil prices drop in line with equities
Oil hit reverse gear on Monday, mirroring sliding stock markets, as investors turned pessimistic over eurozone attempts to produce a definitive solution to the region's debt crisis, analysts said.
New York's main contract, light sweet crude for delivery in November, handed back 34 cents to $86.55 a barrel.
Brent North Sea crude for delivery in December shed $1.17 to $111.06 per barrel, after earlier climbing as high as $113.86 on initial optimism after a weekend gathering of G20 finance ministers.
European stocks also fell on Monday, reversing earlier gains, after Germany warned against undue enthusiasm that a quick solution to the eurozone debt crisis would emerge from an EU summit next weekend on October 23.
Germany sought to dampen expectations for Sunday's European Union summit in Brussels, with government spokesman Stefan Seibert warning that "dreams that everything will be resolved and dealt with by next Monday cannot be fulfilled."
Wall Street shares also tumbled Monday, taking their lead from the European markets' reaction, as investors concluded that the G20 finance meeting in Paris had produced no definitive solution.
Europe vowed to its G20 partners on Saturday that it would take swift and decisive action to resolve a debt crisis that is threatening to drag the world economy back into recession.
Investors are now eagerly awaiting this weekend's summit of EU leaders in Brussels.
"It is quite a crucial week for the markets," said Sucden analyst Myto Sokou.
"Investors should remain cautious ahead of (a) vote in Greek parliament on Thursday with various government members thought to disapprove of the proposed austerity measures.
"However, the main focus will switch to the European leaders summit in Brussels on October 23, for the decision on a comprehensive plan to contain the crisis in the region."
Crude futures had also risen strongly on Friday as confidence grew that the G20 would put muscle into the eurozone rescue and US data showed signs of firming growth.
The gloomy US economic climate lifted a tad on Sunday when key Republican leader Eric Cantor said a congressional supercommittee would reach agreement on $1.5 trillion in government spending cuts by a November 23 deadline.
If a deal is reached before then, the United States can avoid triggering an automatic $1.2 trillion in cuts evenly distributed between military and non-military spending, which Pentagon officials warn would damage US interests.
The discussions had taken place under the shadow of a repeat of political stonewalling by the Republicans, who earlier in the year withdrew from talks with Democrats on lifting the US debt ceiling.
© 2011 AFP