BLBG:Crude Futures Decline as Italy Names New Leader, China Sees ‘Soft Landing
Oil dropped, erasing earlier gains, on concern that new leadership in Italy may not contain the European debt crisis and China’s demand for crude may weaken.
West Texas Intermediate fell as much as 0.7 percent after earlier rising to $99.69 a barrel, the highest level since July 26. Italy’s president offered Mario Monti, a former EU competition commissioner, the post of prime minister yesterday after Silvio Berlusconi resigned. The International Monetary Fund’s Deputy Managing Director Zhu Min said yesterday the world’s second-largest economy was heading for a “soft landing” as growth slows.
“With Europe’s struggle far from over and signs of a slowdown in China, the world’s second largest consumer, the road ahead could be bumpy for oil prices,” Glen Ward, head of retail derivatives at London Capital Group Ltd. said in a note.
Crude for December delivery was at $98.70 a barrel, down 29 cents, in electronic trading on the New York Mercantile Exchange at 10:26 a.m. London time. Prices rose 5 percent last week and have increased for six consecutive weeks, the longest run of gains since April 2009.
Brent oil for December settlement declined 10 cents to $114.06 a barrel on the London-based ICE Futures Europe exchange. The more-active January contract was 18 cents lower at $112.75. December futures, which expire tomorrow, traded at a premium of $15.48 to New York crude, compared with a record $27.88 on Oct. 14. The spread narrowed 14 percent last week.
The euro weakened 0.3 percent to $1.3708 after Italy sold 3 billion euros ($4 billion) of five-year bonds, the maximum target, at the highest yield in more than 14 years.
“The euro is under renewed pressure and the stronger U.S. dollar weighs further on market sentiment and hurts any possible risk appetite,” Myrto Sokou, a London-based commodities analyst at Sucden Financial Ltd. said in an e-mail.
To contact the reporter on this story: Lananh Nguyen in London at lnguyen35@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
