Crude futures headed lower Monday, retreating from Friday’s gains as fresh worries about European debt emerged. Light, sweet crude for March delivery recently traded $1.37, or 1.4%, lower at $96.47 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 69 cents lower at $113.89 a barrel.
Oil prices fell as Greek leaders failed over the weekend to reach a deal on reforms required for additional debt restructuring, sending the euro and other assets seen as riskier bets lower as the dollar rose. The leaders of Greece’s three political parties haven’t yet reached an agreement on austerity measures and economic reforms, which is needed for the country to secure more bailout funds. Earlier Monday, two senior government officials said the leaders were close to agreeing on cutting the private-sector minimum wage by an average of about 20%, and to reduce supplementary incomes.
Concerns over Europe’s debt, along with rising stockpiles in the U.S., have pulled oil back from prices above $100 a barrel hit as recently as last week. The premium of Europe’s Brent crude compared to U.S-traded West Texas Intermediate rose above $17 Monday, the widest gap between the two benchmark contracts since November, on rising inventories in the key U.S. oil hub of Cushing, Okla.
Still, analysts say tensions between Iran and the West continues to keep a floor under prices. Over the weekend Iran reiterated its threat to unilaterally halt oil exports to Europe ahead of a European Union embargo due to come into force on July 1. Concerns are also increasing that Israel could launch a preemptive strike against the Islamic Republic’s nuclear installations, escalating tensions still further.
EasyForexNews Research Team