Oil prices dive lower

, Comments 0 comments

World oil prices slumped on Wednesday after the euro hit a new one-year dollar low amid worries about debt-laden Greece, traders said.

The market also took a hit following news of a larger-than-expected rise in US oil inventories, which appeared to indicate weakening demand in the world's biggest energy consuming nation.

Brent North Sea crude for June delivery tumbled 1.67 dollars to 84.00 dollars a barrel in late afternoon London trade.

New York's main contract, light sweet crude for June, dropped 1.34 dollars to 81.40 dollars.

"Oil pulled back as the dollar hit one-year highs and concerns over the health of the eurozone economies gripped markets once again," said analyst Marius Paun at trading house ODL Markets.

"With traders fleeing the euro, they sought the relative security of the dollar, which put some downside pressure on oil.

"The overriding concern about the strength of the global recovery also sent jitters across commodity markets, with traders concerned that any issues in Greece may halt the recovery."

In foreign exchange trade on Wednesday, the European single currency slid to 1.2804 dollars -- hitting the lowest level since March 12, 2009.

Financial markets have come under heavy pressure after eurozone finance chiefs had over the weekend approved an unprecedented three-year package of loans for debt-ridden Greece.

Of the 110 billion euros (145 billion dollars) to be made available to Greece, the eurozone is set to provide 80 billion and the International Monetary Fund 30 billion.

Meanwhile, the US government's Department of Energy announced Wednesday that US crude stockpiles soared by 2.8 million barrels last week.

That was far greater than market expectations for a gain of 700,000 barrels, according to analysts polled by Dow Jones Newswires.

The oil market was also gripped this week by the Deepwater Horizon oil rig disaster in the Gulf of Mexico.

The rig, operated by British energy firm BP and owned by US contractor Transocean, sank on April 22 -- two days after a massive explosion killed 11 workers.

Since the explosion, an estimated 2.5 million gallons of crude have billowed into the sea from a well below the rig.

BP capped one of three leaks on Wednesday, as emergency crews rushed to protect fragile shorelines and islands at risk from the slick.

Days of work off the coast of Louisiana with underwater submarines nearly a mile below the surface finally bore fruit as a valve was secured over the smallest of the three leaks and the flow shut off.

© 2010 AFP

0 Comments To This Article