Oil slides on stubborn eurozone debt fears

17th June 2011, Comments 0 comments

World oil prices fell on Friday on the back of widespread concern over the Greek debt crisis, analysts said.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for July delivery, dropped $2.25 to $92.70 a barrel, coming off an early low of $92.12 which was the lowest level since late February.

Brent North Sea crude for August shed $1.18 to $112.84.

"Ongoing concerns about the Greek debt crisis continue to weigh heavily on the market and raise further risk-aversion, prompting investors to a heavy sell-off amid these uncertain economic conditions," Sucden analyst Myrto Sokou said.

Traders also deserted crude after a bargain hunting spree on Wednesday as fears of a prolonged debt crisis in the eurozone came to the fore yet again, said Ker Chung Yang, a commodity analyst for Phillip Futures in Singapore.

"There's no solution in the European crisis so I think this will still affect the crude market," he told AFP.

Tensions were rising over debt-ridden Greece, as German Chancellor Angela Merkel and French President Nicolas Sarkozy made a joint call on Friday for a new rescue package to be agreed upon as quickly as possible.

"We need a solution as soon as possible so that we have clarity ... We have been talking about this for the whole of May and June, discussing the same issues again and again without resolving them," Merkel said.

"Germany and France are determined at the upcoming EU summit ... to say that we want a quick solution," Merkel told reporters in Berlin after talks with Sarkozy.

The forex and stock markets, however, took Merkel and Sarkozy's remarks more positively, seeing in them hope for a deal as the eurozone's two top powers appeared to move closer together on finding a solution.

Crude markets were rattled earlier in the week by the failure of eurozone finance ministers to reach an deal on a second bailout package aimed at averting a Greek debt default, which could plunge financial markets into crisis.

Prime Minister George Papandreou on Thursday appealed for unity from his own lawmakers as the International Monetary Fund (IMF) insisted there could be no backsliding on agreed austerity measures.


© 2011 AFP

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