Reuters logo
Oil falls on Greece debt concerns, dollar rise
October 3, 2011 / 2:00 PM / 6 years ago

Oil falls on Greece debt concerns, dollar rise

<p>Pumps are seen at a gas station in Tokyo June 24, 2011. REUTERS/Kim Kyung-Hoon</p>

NEW YORK (Reuters) - Oil fell on Monday as fears that Greece cannot avoid default and a stronger dollar pressured Brent to the lowest settlement in 7-1/2 months and U.S. crude to its lowest close in 12 months.

Concerns that Greek’s debt crisis would spread to Europe’s banks and beyond pressured equities and oil prices even after reports showing U.S. factory activity expanded at a faster pace than expected in September and construction spending rebounded in August provided a brief lift.

“Looks like the negativity from late last week and worries that global demand for oil will be hit by another recession outweighed the better-than-expected data,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Greece’s admission in draft budget figures released on Sunday that it will miss its 2011 deficit target raised new doubts over a planned second international bailout.

The reinvigorated Greece crisis sent the euro to a fresh 8-1/2-month low against the dollar. The dollar index .DXY strengthened more than 1 percent. <USD/>

A stronger dollar can pressure dollar-denominated commodities prices by making them more expensive to consumers using other currencies.

Brent crude for November fell $1.05 to settle at $101.71 a barrel, it’s weakest close since February 15. Brent fell intraday to $100.71, a nearly eight-week low.

U.S. November crude fell $1.59 to settle at $77.61 a barrel, the lowest settlement since September 28, 2010. It traded on Monday from $76.85 to $79.64.

Intraday lows for both Brent and U.S. crude were the weakest prices since August 9, when Brent last fell below $100 a barrel intraday and in the week after ratings agency S&P’s late-Friday downgrade of United States’ credit rating.

Brent’s premium to U.S. crude was little changed, trading above $24 a barrel. The spread widened after support held above $21 as the 2011 third-quarter drew to a close last week.

Trading volumes were just above the 30-day averages for both Brent and U.S. crude on the first day of the fourth quarter after both contracts had sharp price third-quarter price drops.

U.S. stocks fell and the S&P 500 dropped to a 13-month low as investors dumped bank shares on fears that Greece’s worsening financial crisis could bring down a large European lender. .N

Belgian-French bank Dexia’s (DEXI.BR) capital position looked increasingly stretched by its exposure to debt-laden Greece.

U.S. gasoline and heating oil futures briefly turned higher and the day’s losses were limited by the expected impact of last week’s fire at Royal Dutch Shell’s (RDSa.L) Singapore refinery on the global products market, brokers and traders said.

Shell’s 500,000-barrel-per-day refinery shutting caused the company to cancel the lifting of 4 million barrels of crude and to declare force majeure on some of its deals, mostly involving distillates.

DEMAND CONCERNS AS SUPPLY RETURNS

While oil supply and demand appears largely in balance currently, United Arab Emirates (UAE) OPEC governor Ali Obaid Al-Yabhouni said there are “ominous clouds on the horizon” for demand because of global economic problems.

Libya’s interim government said oil output was improving at a faster rate than expected, while cautioning that it will take 12-18 months for production to return to normal.

Later on Monday, the chairman of the National Oil Corporation said told Reuters the country will start pumping oil at two major oil fields with a combined capacity of 450,000 barrels per day (bpd) in about two weeks.

Weekly reports from industry and government on U.S. oil inventories are expected to show crude oil stocks rose last week, according to a preliminary Reuters survey of analysts on Monday.

Additional reporting by Gene Ramos in New York, Claire Milhench in London, Randolph Fabi and Seng Li Peng in Singapore and Daniel Fineren in Dubai; Editing by John Picinich and Sofina Mirza-Reid

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below