Crude down in Asia as Spanish bond yields soar

Growing fears that Spain would be the next country to fall victim to the eurozone debt crisis dragged crude prices lower in Asian trade on Friday, analysts said.

New York’s main contract, light sweet crude for delivery in December, shed 49 cents to $98.33 per barrel on its last trading day.

Brent North Sea crude for January delivery fell 30 cents to $107.71.

Oil prices reflected a broad fall across commodities and equities markets as traders fretted over Spain’s financial situation following a sharp spike in its borrowing costs to record levels, analysts said.

Spain’s treasury had to pay 6.975 percent when it raised 3.6 billion euros ($4.8 billion) in a sale of 10-year bonds, with interest rate the highest since the creation of the single currency, according to Dow Jones Newswires.

The rate is a whisker from the 7.0 percent level considered too high for governments to service their debts.

“I think its kind of a fear that Spain will be the next country that’s going to stir up the situation,” said Ker Chung Yang, commodity analyst for Phillip Futures in Singapore.

Research director Kathleen Brooks at trading site Forex.com warned that Spain faced a tough road ahead in raising funds to cut its debts.

“Spain still has 12 billion euros of debt to auction next month. If sentiment does not start to pick up then we could see funding stresses reach a critical level in Madrid very quickly,” she stated.

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