As Spain optimism fades, oil at 8 month low

SINGAPORE - The Associated Press

Oil touched an eight-month low near $81 a barrel yesterday in Asia amid concern Spain’s bank bailout will not be enough to stem Europe’s debt crisis.

Benchmark oil for July delivery was down $1.15 to $81.55 per barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Earlier on Tuesday, oil dropped to $81.07, the lowest since October. The contract fell $1.40 to settle at $82.70 in New York on Monday.

In London, Brent crude for July delivery was down 98 cents at $97.02 per barrel on the ICE Futures exchange.

Crude jumped on June 11 after the 17 countries that use the euro common currency pledged to lend Spain $125 billion to rescue its faltering banks. However, attention soon turned to the Greek election this weekend, the outcome of which could determine if Greece stays in the euro.

“The initial bullish euphoria surrounding the Spanish bank bailout plan quickly wore off,” energy trader and consultant Ritterbusch and Associates said in a report.

Oil has plunged about 24 percent from $106 since early last month amid signs of slowing economic growth in the U.S., China and Europe. Traders will also closely watch a quarterly meeting of the Organization of Petroleum Exporting Countries tomorrow. Some members of the cartel have suggested recently that OPEC is producing too much crude, and the group could decide to cut supplies to help boost prices.