Click here for the top 10 rankings in the regionOctober 8, 2015 6:09
Oil Mixed On Euro Zone Debt, Wall Street
Dollar rises to seven-week high against euro; Eurozone sanctions on Iran oil exports loom; Tension, winter in Middle East supports.
November 26, 2011 11:34 by Reuters
Crude oil markets diverged on Friday as worries about Europe’s debt crisis weighed on Brent, while a stronger Wall Street open supported U.S. prices.
U.S. shares rose as investors snapped up beaten-down stocks after Wall Street suffered six straight sessions of losses.
But worries about the euro escalated following Italy’s debt sale on Friday, as both short and longer term borrowing costs in Europe’s third largest economy soared to euro lifetime highs.
No relief was offered from Europe’s leaders, who remained divided over the region’s debt crisis as Germany’s resolute opposition to a joint euro zone bond continued.
“There are talks and talks, but nothing happens,” said Thorbjoern Bak Jensen, an analyst at A/S Global Risk Management Ltd.
Brent crude oil futures were 23 cents down at $107.55 a barrel by 1535 GMT. U.S. crude was $1 higher at $97.17 a barrel around the same time. Both contracts had recouped losses of over a dollar earlier in the session.
Oil, along with other dollar-denominated commodities, tends to be negatively correlated with the greenback as it becomes more expensive for holders of other currencies.
The dollar was trading at a seven-week high against the euro and 0.36 up against a basket of currencies around the same time.
Bak Jensen said Europe’s economic indicators pointed to the region’s declining health, while hopes were pinned on the U.S. where economic data appeared to reflect a marked improvement in growth.
A disastrous debt sale in Berlin earlier this week has increased worries about European growth, and was seen to indicate that Europe’s biggest economy was not immune to the spreading debt crisis.
“The European situation is still uncertain,” said Tetsu Emori, a commodities fund manager at Astmax Investments in Tokyo. “The crisis is still ongoing and what happened in Germany has made investors quite nervous.”
Tension in the Middle East continued to balance against spiralling worries about the euro zone.
In the latest outbreak of violence in Syria, the country’s military said 10 of its personnel, including six pilots, were killed in a “terrorist” attack on Friday.
The spokesman said the killings proved there was foreign involvement in the eight-month revolt against President Bashar al-Assad’s rule.
And expectations grew of European sanctions on imports of crude oil from Iran after a slip by a French government official mistakenly suggested Paris was about to unilaterally ban Iranian crude.
Iran is OPEC’s second-largest oil producer and Italy, Spain and Greece rely on Iran for around 13 percent of their crude oil needs, according to U.S. government data.
Italy’s oil industry body said sanctions prohibiting imports of crude oil from Iran were seen to be inevitable and would come at a cost to the region’s oil companies.
While the push for a European oil embargo on Iran could raise the geopolitical premium on oil prices in the coming months, the proposal could face resistance from some EU members.
Some Western governments are concerned that such moves could hurt the world economy as well as Tehran.
“Escalation of rhetoric towards Iran’s nuclear programme has supported oil prices in recent weeks, competing with the gloomy economic headlines as the main driver of oil prices,” Gordon Kwan, head of oil research at Mirae Assets Securities in Hong Kong said in a research note.
(Additional reporting by Florence Tan in Singapore; editing by James Jukwey)