SG:Brent dips below USD 100 per barrel on Greece fears
The News reported that brent crude futures dipped below the psychologically important USD 100 level as worries that a Greek debt default could spread across the banking system and threaten the global economy showed no signs of abating.
Brent crude for November delivery was trading USD 1.72 lower at USD 99.99 by 1159 GMT having hit an intraday low of USD 99.84 per barrel earlier in the session. Brent last fell under USD 100 on August 9th 2011.
US crude futures fell USD 2.07 to USD 75.54 per barrel after reaching an intraday low of USD 75.45. A Brent price forecast downgrade from typically bullish commodity forecaster Goldman Sachs sounded another note of caution for investors. The investment bank cut its 2012 Brent crude forecast to USD 120 a barrel from USD 130 per barrel, joining a growing chorus of increasingly bearish analysts.
Goldman Sachs analysts said that the market continues to focus on the risk of a new economic recession, triggered by the stress on the European financial and banking system. The financial stress in Europe will continue to present headwinds to economic and oil demand growth next year.
The market continues to focus on the risk of a new economic recession, triggered by the stress on the European financial and banking system. The financial stress in Europe will continue to present headwinds to economic and oil demand growth next year.
Citigroup oil analysts said that concern about Greece’s ability to avert a default, as negotiations about a second bailout inched ahead, spooked equity markets after the country admitted it would miss its deficit targets. If our economists are correct in their bearishness, then the macro gloom will eventually make itself felt in the oil markets via weak product demand and low refining margins that undermine crude demand and drive spreads lower.
Mr Tony Nunan Tokyo based risk manager at Mitsubishi Corporation said that “I think more people are getting more afraid. There’s a concern that there will be a mini financial crisis. If they don’t do it properly, it will cause some banks in Europe to fail and there will be a domino effect referring to European leaders’ efforts to resolve Greece’s financial crisis. The deepening crisis has forced investors to seek safe havens such as gold and Treasuries, which has helped push the US dollar to its highest in more than 8 months against a basket of major currencies.”
