U.S. crude oil price retreated on Wednesday as European debt problems weighed on the markets and China's third interest rate hike this year caused demand concerns. Crude investors worried about the debt contagion in Europe. As Greece was struggling to avoid a debt default, Portugal's government long-term bond ratings were slashed to junk by Moody's Investors Service. And European worsening debt problems dragged the euro down about 0.8 percent against the dollar. The dollar index, instead, gained 0.5 percent, pressuring oil prices. Oil was also pressured by the news that China raised interest rate for the third time this year. The People's Bank of China announced on Wednesday it will raise bank's benchmark one-year borrowing and lending rates by 25 basis points beginning Thursday, showing its determination to tackle inflation. Crude markets were concerned that further tightening monetary policy could lead to a slowing economy, which could hurt oil demand. In the Middle East, violence continued in Libya and Syria, which also caught investor's attention. The strategic reserve release by the International Energy Agency proved to be inefficient and had little effect to lower oil prices. Light, sweet crude for August delivery fell 24 cents, or 0.25 percent to settle at 96.65 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery edged up 1 cent to close flat at 113.62 dollars a barrel.

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