28 June 2012 16:06 [Source: ICIS news]
LONDON (ICIS)--The front-month August ICE Brent crude oil futures contract retreated by more than $1.00/bbl on Thursday, as Italy’s debt yields remained above 6% and pessimism grew over the eurozone debt crisis.
By 14:17 GMT, August ICE Brent had fallen to an intra-day low of $92.41/bbl, down by $1.09/bbl compared with the settlement on Wednesday. The contract then edged a little higher to trade around $92.70/bbl.
At the same time, the front-month August NYMEX WTI contract was trading around $79.60/bbl, having touched an intra-day low of $79.37/bbl, a loss of 84 cents/bbl from Wednesday’s close.
Italy’s bond auction on Thursday saw its yield on benchmark 10-year bonds rise to 6.19%, significantly higher than the 6.03% yield at its previous bond auction in May.
The rising yields on Italian bonds indicate that investors are losing confidence in the Italian economy and investors are demanding higher returns.
Thursday's bond auction took place ahead of the EU summit in Brussels, at which European leaders are aiming to help resolve the ongoing European debt crisis.
Spain, Italy and France are pushing for tighter fiscal union between member states.
France's newly elected President Francois Hollande is pushing for eurobonds to be issued, to bring down high yields for troubled nations that are paying unsustainable rates to borrow money.
However, the idea has been rejected by Germany's Chancellor Angela Merkel, because it will increase German exposure to external debts.
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