Oil market falls after EU-inspired bounce

28th October 2011, Comments 0 comments

World oil prices fell Friday as investors took profits from bumper gains won the previous day on a breakthrough EU deal to help resolve the eurozone debt crisis and prevent another recession.

New York's main oil contract, light sweet crude for delivery in December, slid $1.33 to $92.63 a barrel.

Brent North Sea crude for December delivery slipped $1.03 to $111.03 a barrel in London afternoon deals.

The EU deal sent the euro rocketing which in turn caused oil prices to soar more than $3.0 Thursday, while sentiment was also boosted by better-than-expected economic growth in top crude consumer the United States.

A strong European single currency, which surged to a seven-week high above $1.42 Thursday, makes dollar-denominated oil cheaper for buyers not using the US currency, pushing up demand for crude and eventually the commodity's price.

"The outcome of eurozone talks in Brussels put wind in the sails of oil prices, commodity markets and shares yesterday," said analysts at the Vienna-based JBC Energy consultancy.

"The eurozone deal has provided short-term respite -- but the zone is far from being out of the woods and the threat of recession looms large."

Global markets have been plagued by the eurozone debt crisis for months amid concern that the debacle could push the world economy into another vicious recession -- which would slash demand for oil.

EU leaders meanwhile this week cut a crucial deal in an affort to resolve the eurozone crisis, prevent debt contagion in the likes of Italy and Spain, and avert another painful economic downturn.

© 2011 AFP

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