By Virginia Harrison and Steve Gelsi, MarketWatch
NEW YORK (MarketWatch) — Crude-oil futures fell on Thursday after big gains in the previous session, as worries about the euro zone and the health of the global economy once again preoccupied investors.
Crude for December delivery CL1Z -1.54% dropped $1.64, or 1.5%, to $100.95 a barrel in electronic trade.
Debt offerings by Spain and France drove up yields, sparking fresh jitters about the spread of the European debt crisis and paving the way for a drop in crude-oil prices.
Oil futures had settled at their highest level in more than 5 months, at $102.59 a barrel, in Wednesday’s North American session.
The sharp rise was largely driven by news that Canada’s Enbridge Inc. ENB +0.82% would reverse the flow of a pipeline that moves oil between Gulf of Mexico to Cushing, Okla., the delivery point of benchmark Nymex oil.
The news immediately drove hopes that supply bottlenecks in Cushing would be eased.
But on Thursday, rising bond yields in some euro-zone nations, and a warning from ratings agency Fitch of the threat to U.S. banks should the European crisis worsen, damaged sentiment across global markets.
“The euro-zone crisis is already undermining global business confidence, reducing risk appetite in financial markets and strengthening the U.S. dollar, all-important negatives for commodity prices,”Julian Jessop, chief global economist at Capital Economics, wrote in a research note.
Weaker sentiment can dampen crude investment, as a slowing global economy dulls the outlook for energy demand.
“Even if the crisis can be contained to the region, recession in Europe would still have a significant impact on commodity demand,” Jessop added.
