Oilhas fallen back below $100 per barrel as fears increase that the European debt crisis may get worse.
Bloomberg Businessweek reports that oil futures have fallen as much as 3.8 percent as Spain’s borrowing costs spike to a euro-era high, and “…as French bonds’ spread to Germany’s widened.”
In Thursday’s afternoon trading U.S. oil stocks fell sending the Standard & Poor’s 500 Index down for a second day, reports Bloomberg.
“There is a lot of uncertainty about what’s going to happen with the euro in general and that certainly makes folks concerned about potential recession in Europe,” said Rick Mueller, a principal with ESAI Energy LLC in Wakefield, reports Bloomberg. “The fundamental picture really did not look that bullish.”
Crude oil for December delivery fell $3.64 to $98.95 a barrel on the New York Mercantile Exchange, prices settled yesterday at $102.59, the highest levels since the end of May. These change is prices came after Enbridge Inc. and Enterprise Products Partners LP said “…hey will reverse the direction of the Seaway pipeline, adding an outlet to transport oil from the central U.S. and Canada to the coast of the Gulf of Mexico,” says Bloomberg.
Brent oil prices have also fallen. Bloomberg reports:
“Brent oil for January settlement fell $3.87, or 3.5 percent, to $108.01 a barrel on the London-based ICE Futures Europe exchange. Brent’s premium to West Texas Intermediate, the New York benchmark, narrowed 21 cents to $9.07, down from a record $27.88 on Oct. 14 and from $13.02 on Nov. 15.”
Spanish bonds fell today, which drove 10-year yields to 6.75 percent, the highest seen since the euro was introduced.
Spain’s economy is only expected to grow about 0.8 percent this year, according to Finance Minister Elena Salgado.
Looking to France, Bloomberg reports:
“In France, the extra yield, or spread, that investors receive for holding 10-year French debt instead of benchmark German bunds reached 2 percentage points for the first time in the shared currency’s history as the country sold 6.98 billion euros of notes.”
The outlook for the euro zone continues to weaken, and it is expected that a recession will be seen in the next year.
Attempting to help ward off further debt crisis, the European Central Bank bought Italian debt today, says Bloomberg.
“There is definitely some underlying concern about Europe and that’s providing resistance to oil prices,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut, reports Bloomberg. “You are seeing some profit-taking today.”
That’s all for now,