Failure to cut deficit in U.S. drives oil investments down
Crude oil futures posted another round of losses on global commodity charts today, underlining a day of extremely volatile trading on persisting trader fears that the ongoing debt crisis in Europe will severely undercut global economic growth, offsetting the demand for the commodity oil. Signs of financial trouble in the U.S. also caused a dip in oil investments.
A congressional super-committee in the U.S. appointed to cut more than a trillion dollars from the nation’s deficit over the course of the next decade is expected to announce a failure to reach a viable agreement before the official Wednesday deadline. Though some last-minute deals may take place, the commodities market has braced itself to take the hit.
Despite the fact that a new fiscally conservative government won the popular vote in Spain, committing the debt-riddled nation to a protracted period of austerity; trader confidence in the country successfully tackling its soaring bond yields is weak.
Bond yields in all of Spain, Italy, France and Belgium continued to rise, as investors flocked to the safe haven of Germany Bunds. The state of health of French government bonds is especially alarming, as the nation’s borrowing costs are rising steadily, sapping life from France’s economic growth projections in the coming year.
Without U.S. to offset the economic damage Europe is wreaking on the globe, crude oil prices and oil investments have reported another round of sharp falls on the commodity index.
Brent crude oil futures for settlement in January now sit at $106.88 per barrel on the ICE Futures Exchange in London, down 68 cents, and marking the lowest mark the European benchmark has touched since early October.
West Texas Intermediate crude oil prices for January delivery lost 75 cents to end the day at $96.92 per barrel in electronic trading on the New York Mercantile Exchange.
Futures losses were curbed somewhat by the rising tensions around the nuclear program in Iran. Geo-political turmoil in the Middle East has placed severe obstacles in OPEC’s exporting efforts out of the region.