Euro zone concerns drive oil investments down
Brent crude oil futures sank in early trading today amid mounting concerns that Europe’s persisting debt woes would resurface with renewed vigor. Oil investments in the European benchmark pared down the gains it accumulated earlier on the strength of the news of possible supply disruptions stemming from Iran.
Brent crude oil prices fell 22 cents and settled at $113.50 per barrel during intraday trading on the ICE Futures Exchange in London. Oil investments in the contract sank lower still earlier in the day, tumbling to $112.78 per barrel before rebounding mildly.
West Texas Intermediate crude oil futures lost 12 cents and settled at $102.12 per barrel in electronic trading on the New York Mercantile Exchange.
Pessimistic ratings projections coming in from the agency of Fitch were deemed the main reason for crude’s slide down the polls. The agency’s criticism of the way the euro zone has handled its mounting debt so far has made old fears reappear on the market, prompting traders to act more cautiously, and instigating an appropriate drop in oil investments. The increasingly worrisome financial situation in Italy also weighed on the minds of investors and analysts alike.
Crude still has a safety cushion on the charts however, as the nuclear disputes surrounding Tehran continue to escalate. The fuel’s futures received a boost yesterday when an Iranian nuclear scientist was killed with a car bomb, prompting accusations and warnings to be exchanged between the Middle Eastern oil hub and Israel.
Economists and analysts are currently debating whether the rapidly deteriorating situation in Iran will have a long-lasting effect on crude oil futures and oil investments. Some have stated already that by the time a total EU embargo is set into place, new Asian routes will be launched, and OPEC’s increased production caps will remain the same.