Brent crude dipped below $112 a barrel today, after sharp falls a day earlier, as growing concerns over Europe’s debt crisis overshadowed signs of resilient oil demand from China.
Brent crude fell 51 cents a barrel to $111.80 earlier, after settling down $2.69 yesterday at $112.31, its first fall in five sessions. U.S. crude traded 39 cents lower at $95.35 a barrel.
Italian 10-year bond yields shot up well above 7 per cent, a level widely deemed unsustainable, triggering sharp falls in Asian shares and lifting the dollar against the euro as investors trimmed holdings in risky assets.
“We’ve moved from a low-growth scenario to one where there is a real threat of recession in the euro zone, and that’s weighing on oil markets,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
“Investors are taking risk off the table.” There is now a 60 per cent chance of a euro zone recession, according to the consensus of 250 economists, up sharply from 40 per cent in a Reuters poll conducted in October.
According to technical charts, Brent will fall to $109 per barrel, while US oil could have peaked at the previous trading session’s high of $97.84 per barrel, said Reuters market analyst Wang Tao