Oil investment takes a tumble as Spain sees credit rating cut
Crude oil futures and oil investment in general took a tumble in New York today, falling from their four-week peak and erasing the gains they had built over the past sessions, after news reached the sector that Spain’s credit rating was severely cut. The cut reignited old fears that the debt crisis in the euro zone would cause a collapse of the region’s economy.
Crude prices fell almost 1% as Spain’s credit rating fell from A to BBB+. The nation’s long-standing struggle with debt was one of the strongest catalysts for the quickly-escalating crisis in Europe, and the fact that it still lingers largely unresolved did not provide traders with much confidence. Crude futures also hit technical resistance on the charts, causing a subsequent downturn in prices and investments.
West Texas Intermediate prices for June delivery fell 81 cents to a oil price per barrel of $103.74 in NYMEX markets. The Spanish reports razed the 43 cent upswing that the benchmark went through yesterday. Prices are still up more than 1% for the week overall.
Brent futures for settlement in June fell 34 cents to $119.58 per barrel on the ICE Futures Exchange in London. Investments in the European benchmark managed to retain the bulk of their leads, yet if the euro zone collapses back into a recession, the outlook stands rather grim.
Prices had an underlying bottom, as US GDP figures posted an impressive increase for the first quarter of the year, gaining 2.2%. A drop off in the nation’s unemployment claims also bolstered trader confidence. Yet, Europe still remains a primary cause for concern on everyone’s mind, and with its credit ratings being slashed, overall, this is difficult to describe as a peak oil investment time.