Brent crude futures down by $3/bbl on fresh eurozone worries

23 July 2012 09:56  [Source: ICIS news]

SINGAPORE (ICIS)--Brent crude futures were down by $3/bbl in Asian afternoon trade on Monday, amid fresh concerns about the economic health of the eurozone.

At 16:10 Singapore time (08:10 GMT), Brent crude for September delivery had fallen by $3/bbl to $103.83/bbl, while US crude was down by $2.66/bbl at $89.17/bbl.

Oil prices fell after Spain’s cost of borrowing reached a record high, fuelling worries that the country may need a full sovereign bailout, which in turn could have a negative impact on fuel demand.

“[The] eurozone crisis has become the focus again,” DBS Bank said in a research note.

The region of Valencia is expected to seek a fiscal bailout of around €18bn ($21.7bn).

Despite the approval of a €100bn bailout package for the Spanish banking sector, Valencia has still applied for help under the national government's assistance package, denting market sentiment, according to the Commonwealth Bank of Australia in its daily research note.

“Trimming the budget won’t be easy [for Spain],” said DBS Bank, adding that the country’s dilemma is whether to allow the government deficit to grow to rescue Valencia, or reject the request and “[economic] growth suffers further”.

($1 = €0.83)

By: Nurluqman Suratman

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