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Oil steady as worries about Europe continue
Source: Agencies |
June 21, 2011, Tuesday
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OIL leveled off yesterday with investors still concerned about the European financial crisis.
Benchmark crude for July delivery gained 25 cents to settle at US$93.26 per barrel on the New York Mercantile Exchange. The July contract expires today, and most of the trading switched to the August contract, which added 23 cents to settle at US$93.63 per barrel.
All eyes remain on Greece, which is trying to implement tough new austerity measures necessary to keep international aid coming to deal with its debt crisis. Without that aid, investors worry that Greece's financial troubles could spread to other European countries.
Credit ratings agency Moody's has warned that it may downgrade its debt rating on three of France's largest banks because of their exposure to Greek debt. Moody's said yesterday that it may reduce Italy's credit rating due to poor growth prospects and high public debt.
"The fear is that we end up with a banking crisis like 2008," said Michael Lynch, president of Strategic Energy & Economic Research. "It's a small possibility, but people are reacting to that."
Oil stayed just above US$93 per barrel yesterday despite rising stock markets. The Dow Jones Industrial Average was up about 60 points in afternoon trading. The Nasdaq and the Standard & Poor's 500 were higher as well.
The dollar was fairly steady on yesterday. Lynch said he expects it to remain strong until investors are convinced that Greece will go through with plans to cut spending and raise taxes.
A stronger dollar usually pushes oil lower. Oil is priced in dollars and tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money.
In other Nymex trading for July contracts, heating oil lost 5.1 cents to settle at US$2.932 per gallon and gasoline futures dropped 3.5 cents to settle at US$2.912 per gallon. Natural gas gave up less than a penny to settle at US$4.317 per 1,000 cubic feet.
In London, Brent crude fell US$1.52 to settle at US$111.69 per barrel on the ICE Futures exchange.
Benchmark crude for July delivery gained 25 cents to settle at US$93.26 per barrel on the New York Mercantile Exchange. The July contract expires today, and most of the trading switched to the August contract, which added 23 cents to settle at US$93.63 per barrel.
All eyes remain on Greece, which is trying to implement tough new austerity measures necessary to keep international aid coming to deal with its debt crisis. Without that aid, investors worry that Greece's financial troubles could spread to other European countries.
Credit ratings agency Moody's has warned that it may downgrade its debt rating on three of France's largest banks because of their exposure to Greek debt. Moody's said yesterday that it may reduce Italy's credit rating due to poor growth prospects and high public debt.
"The fear is that we end up with a banking crisis like 2008," said Michael Lynch, president of Strategic Energy & Economic Research. "It's a small possibility, but people are reacting to that."
Oil stayed just above US$93 per barrel yesterday despite rising stock markets. The Dow Jones Industrial Average was up about 60 points in afternoon trading. The Nasdaq and the Standard & Poor's 500 were higher as well.
The dollar was fairly steady on yesterday. Lynch said he expects it to remain strong until investors are convinced that Greece will go through with plans to cut spending and raise taxes.
A stronger dollar usually pushes oil lower. Oil is priced in dollars and tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money.
In other Nymex trading for July contracts, heating oil lost 5.1 cents to settle at US$2.932 per gallon and gasoline futures dropped 3.5 cents to settle at US$2.912 per gallon. Natural gas gave up less than a penny to settle at US$4.317 per 1,000 cubic feet.
In London, Brent crude fell US$1.52 to settle at US$111.69 per barrel on the ICE Futures exchange.
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