Crude falls on eurozone concern, China indicating no large stimulus

30 May 2012 17:01  [Source: ICIS news]

LONDON (ICIS)--Crude oil futures extended losses on Wednesday pressured by mounting concerns over the eurozone debt crisis and reports that China will not roll out large-scale stimulus measures to revive economic growth.

By 15:00 GMT, the front-month July Brent crude oil contract had hit an intra-day low of $103.28/bbl, a loss of $3.40/bbl from the previous close. The contract then edged a little higher to trade around $103.40/bbl.

At the same time, the July NYMEX WTI contract was trading around $87.65/bbl, having touched an intra-day low of $87.52/bbl, a loss of $3.24/bbl compared with Tuesday’s settlement.

Crude oil futures are pressured by mounting concerns over the eurozone debt crisis. The euro fell towards two-year lows against the US dollar on Wednesday amid fears of a collapse of the single currency.

Italian benchmark 10-year bonds were heard to be attracting yields above 6% on Wednesday, a level which is widely agreed to be unsustainable.

In addition, a new opinion poll in Greece also showed that the far-left, anti-austerity Syriza party, would win if elections were held now. A second round of elections is scheduled for 17 June.

Away from Europe, China indicated that there will not be another large stimulus package to revive economic demand. China, the world’s second largest consumer of crude oil, implemented a huge stimulus package at the height of the credit crisis several years ago which prevented its economy from collapse.

By: Kawai Wong
+44 20 8652 3214

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