Renewed concern over Europe’s debt crisis trigger fall in oil investments
Crude oil prices fell on the Asian commodity index today, after reports flooded the sector that investors are losing confidence in Europe’s handling of its ongoing debt crisis. The dismal economic growth projections for the addled region dragged down oil investments and erased the backwardation effect that has been giving crude oil its recent edge on the charts. Worse than expected industrial production rates in the euro zone also weighed down on oil investments as the region’s demand for crude faltered.
Despite the fact that the newly appointed governments in Italy and Greece are actively pushing for the long-awaited reforms and austerity measures the nation need, traders expressed worries over the sluggish way with which Europe’s recent debt deal has been unravelling. Though Italy’s reform-shy former premier Silvio Berlusconi has now been replaced by the ex-European Commissioner Mario Monti, the country’s state of economic deterioration may be too severe to fix at this point in time. Italy’s bond yields are now the highest Europe has ever seen, and both crude oil futures and oil investments are reacting to the news accordingly, posting their first losses on the charts in more than six weeks.
The eyes of economists and investors remain on the slow economic recovery taking place in the U.S. The nation’s retail and industrial sectors have been posting promising figures; however, its high unemployment rates are still a serious cause for worry. Commodity futures in the U.S. retreated to below $99 per barrel, after coming close to breaking past the resistant $100 per barrel mark just yesterday.
West Texas Intermediate commodity futures are currently trading at $98.64 per barrel in electronic trading on the New York Mercantile Exchange, showing a decrease of 85 cents. The U.S. benchmark commodity oil has soared more than 30% over the past six weeks, something that most economists are now attributing to its sudden sharp fall.