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Oil drops as US, Europe clash over debt crisis
Source: Agencies |
September 17, 2011, Saturday
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Oil prices dropped yesterday as the US and Europe clashed over how to handle the debt crisis in Greece.
Benchmark West Texas Intermediate crude gave up US$1.92, about 2.2 percent, to US$87.48 per barrel at midday in New York. Brent crude, which is used to price many varieties of foreign oil, lost 35 cents to US$111.93 in London.
US Treasury chief Timothy Geithner is meeting with European finance ministers in Poland, which may suggest that the US is growing more concerned about Europe's direction. If the Greek government defaults, there is a potential for an economic ripple effect across the continent that could eventually reach the US.
A weakened global economy drives energy prices lower and the lack of a certainty about Europe has been pressuring the energy sector. Europe consumes about 18 percent of all crude produced globally.
The US is now pushing for a more decisive solution. European leaders yesterday pushed back, saying they want to postpone a decision on more Greek payouts until October.
"That's bad news," independent oil analyst Andrew Lipow said. "The European governments can't agree on how to lend Greece money. They're not solving the problem."
There are issues in the United States, however, that are pushing down energy demand as well.
US refineries will use less oil this month as they reconfigure plants to produce winter fuel blends. Refiners must use a different blend during warm summer months to reduce emissions.
Unemployment rates also rose in a majority of states last month, according to the Labor Department, and that will change how consumers behave, and likely how much energy they use.
And a private survey released yesterday suggests that consumers are increasingly worried. The Thomson Reuters/University of Michigan's consumer sentiment index said consumer confidence lifted slightly in September. But its reading on future expectations fell to its lowest level since May 1980.
In other commodities trading, heating oil fell 1.19 cents to US$3.0127 per gallon and gasoline futures grew 1.69 cents to US$2.7997 per gallon. Natural gas lost 3.4 cents to US$3.844 per 1,000 cubic feet.
Benchmark West Texas Intermediate crude gave up US$1.92, about 2.2 percent, to US$87.48 per barrel at midday in New York. Brent crude, which is used to price many varieties of foreign oil, lost 35 cents to US$111.93 in London.
US Treasury chief Timothy Geithner is meeting with European finance ministers in Poland, which may suggest that the US is growing more concerned about Europe's direction. If the Greek government defaults, there is a potential for an economic ripple effect across the continent that could eventually reach the US.
A weakened global economy drives energy prices lower and the lack of a certainty about Europe has been pressuring the energy sector. Europe consumes about 18 percent of all crude produced globally.
The US is now pushing for a more decisive solution. European leaders yesterday pushed back, saying they want to postpone a decision on more Greek payouts until October.
"That's bad news," independent oil analyst Andrew Lipow said. "The European governments can't agree on how to lend Greece money. They're not solving the problem."
There are issues in the United States, however, that are pushing down energy demand as well.
US refineries will use less oil this month as they reconfigure plants to produce winter fuel blends. Refiners must use a different blend during warm summer months to reduce emissions.
Unemployment rates also rose in a majority of states last month, according to the Labor Department, and that will change how consumers behave, and likely how much energy they use.
And a private survey released yesterday suggests that consumers are increasingly worried. The Thomson Reuters/University of Michigan's consumer sentiment index said consumer confidence lifted slightly in September. But its reading on future expectations fell to its lowest level since May 1980.
In other commodities trading, heating oil fell 1.19 cents to US$3.0127 per gallon and gasoline futures grew 1.69 cents to US$2.7997 per gallon. Natural gas lost 3.4 cents to US$3.844 per 1,000 cubic feet.
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