Crude falls on Eurozone worries, Iran nuclear talks hopes

23 May 2012 12:30  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures fell by more than $1/bbl on Wednesday on concerns over the Eurozone debt crisis and anticipation of a possible resolution of the Iranian nuclear crisis.

At 10:47 GMT July Brent crude on London’s ICE futures exchange was trading at $107.08/bbl (€84.59/bbl), down $1.33/bbl from the previous close. Earlier, the North Sea benchmark fell to a session low of $106.88/bbl, down by $1.53/bbl.

July NYMEX light sweet crude futures (WTI) were trading at $90.91/bbl, down by 94 cents/bbl on the previous close. Earlier, the US benchmark declined to a session low of $90.71/bbl, down by $1.14/bbl.

Leading world powers are set to hold talks with Iran in Baghdad on Wednesday to discuss the crisis triggered by Tehran’s controversial nuclear programme. Hopes of a successful resolution to the crisis were buoyed following talks between Iran and the United Nations body, the International Atomic Energy Agency, which resulted in hopes that the agency will gain access to Iran’s nuclear installations.  

Concerns of a possible exit of debt-laden Greece from the Eurozone and the resultant negative impact this could have on the global economy and oil demand continued to plague investors.

Worries were heightened on Tuesday after Germany ruled out a proposed development of Eurobonds as a method to ease the Eurozone debt crisis. 

The US dollar strengthened against the Euro and other leading currencies, making dollar denominated commodities such as crude less attractive to investors.

Equity markets in Asia also softened amid Eurozone worries with the Nikkei 225 stock index in Japan down 1.98% at 8,556.60 on Wednesday.

Weekly US inventory data from industry body the American Petroleum Institute (API) revealed a 1.5m bbl rise in US crude stocks, the ninth successive week in which crude inventories have risen. However, the rise was countered by a very large 4.5m bbl fall in US gasoline stocks.

Traders now await the release of official weekly US Government inventory data from the Energy Information Administration (EIA) which is due out later on Wednesday.

$1 = €0.79

By: James Dennis
+65 6780 4359

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