By Sara Sjolin, MarketWatch
LONDON (MarketWatch)—Oil futures dropped in electronic trade on Wednesday, as renewed concerns about the euro zone hampered risk sentiment.
Crude-oil futures for November delivery CLX2 -0.82% gave up 65 cents, or 0.7%, to $90.70 a barrel on the New York Mercantile Exchange, during European trading hours.
On Tuesday, oil prices settled at the lowest level since Aug. 2, after Fed official Charles Plosser criticized the central bank’s decision to launch a third round of quantitative easing. Plosser said the asset purchases are unlikely to boost economic growth and that “frictions and structural adjustments” holding back improvements in labor markets cannot be cured by monetary policy. See: Fed’s Plosser slams QE3.
The comments also soured the trading mood in Asia and Europe, where regional bourses dropped sharply on Wednesday.
Developments in the euro zone further added to market worries, with both Spain and Greece in the limelight. European Central Bank executive board member Joerg Asmussen said the central bank will not take part in any potential debt restructuring of Greece, “because this would constitute state financing, which is forbidden,” German daily Die Welt reported. See: Asmussen: ECB won't take part in Greek restructure.
In Spain, the region of Catalonia called for a snap election, stirring fears it could lead to independence for the country’s most economically important region. See: Spain yields surge on Catalonia, Greek uncertainty .
“The renewed escalation of the debt crisis in the euro zone, with violent protests in Spain against the planned new austerity measures, has sparked gloomier sentiment on the financial markets once again and is also putting oil prices under pressure,” analysts at Commerzbank said in a note.
The analysts also pointed to the U.S. Department of Energy releasing official inventory data later in the day.
“The focus is likely to be not only on stocks of crude oil but also on product stocks, which are at a very low level for this time of year. This is particularly true of distillates, which can be regarded as critical with the heating season set to start in just a few weeks,” they said.
Elsewhere in the energy complex, prices were mixed.
Gasoline for October delivery RBV2 +0.77% climbed 2 cents, or 0.7%, to $2.99 a gallon, while heating oil for the same month HOV2 -0.72% fell 2 cents, or 0.5%, to $3.09 a gallon.
Natural-gas futures for October delivery NGV12 +0.65% , which expire Wednesday, rose 3 cents, or 1.1%, to $2.96 per million British thermal units.
Sara Sjolin is a MarketWatch reporter, based in London.
