Crude oil prices slip on Greek default fears
World oil prices slid on Monday, as tumbling global equities and fresh fears of a Greek default sparked concern over the energy demand outlook, with the market also hit by the strong dollar.
New York’s main contract, West Texas Intermediate (WTI) for delivery in November, dipped 47 cents to $78.73 a barrel.
Brent North Sea crude for November was down 34 cents to $102.42 in London midday trade.
Asian and European equities slumped and the euro hit an eight-month dollar low on Monday over renewed fears of a Greek sovereign default and its impact on the struggling global economy.
Athens admitted over the weekend that it would not meet a target for reducing its massive deficit, heaping fresh pressure on the fast-moving eurozone debt crisis and sparking a run for the safe-haven US dollar.
“There is a selling in oil futures, tracking equities and the strengthening of the US dollar,” said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.
“Global markets continue to be concerned about economic growth, especially in Europe and the US… Because of the concern about global markets, there is a flight to safety with investors flocking to the US dollar,” he told AFP.
European debt fears resurfaced after Greece said Sunday that it would miss its deficit target set for it by the IMF and EU.
Athens said the Greek budget deficit would drop to 8.5 percent of gross domestic product (GDP) in 2011. That fell short of a 7.4-percent target which had been initially fixed in June.
The European single currency slid to $1.3314 — the lowest point since January — before a meeting due on Monday of eurozone finance ministers to decide whether Greece should receive an eight-billion-euro loan installment.
A stronger greenback makes dollar-priced crude more expensive to traders using other currencies. That tends to dampen demand and weigh on prices.