Global oil prices slip amid concerns over EU economy

SINGAPORE - The Associated Press

A worker pumps petrol at a gas station in Quito, Ecuador. Global oil prices are extremely fragile due to the developments in the eurozone and the Middle East. REUTERS photo

Oil prices hovered near $103 a barrel yesterday in Asia amid investor worries that Europe’s debt crisis will undermine economic growth and crude consumption.

Benchmark oil for June delivery was down eight cents to $103.03 a barrel at late afternoon Singapore time yesterday in electronic trading on the New York Mercantile Exchange. The contract fell 77 cents to settle at $103.11 in New York on April 23. Brent crude for June delivery was down 26 cents at $118.45 per barrel in London.

Traders are concerned fiscal austerity measures designed to lower European debt levels may trigger a recession this year. On April 21, a survey showed the eurozone’s manufacturing and services sectors unexpectedly fell in April.

Risk of more collapses
“Developments in the euro area continue to drive sentiment,” said Gerald Lyons, chief economist at Standard Chartered. “The biggest threat facing the world economy is a collapse of one or more euro area economies.” Crude has traded between $100 and $110 for most of this year as the U.S. economy improved more than expected but crude demand remained weak. Some analysts are optimistic that crude demand in the U.S. and China, the world’s two largest oil consumers, is about to rebound. Economic sanctions by Western powers against Iran may also cut crude output from the OPEC member, tightening global supplies.

The Dutch government’s quit yesterday after failing to agree on a plan to bring its own deficit in line with EU rules, added to these concerns.

The government information service announced Queen Beatrix had accepted the resignation of Prime Minister Mark Rutte and his Cabinet after a meeting in which Rutte told her talks on a new austerity package had failed over the weekend.

“We’re looking at the bottom in U.S. gasoline demand, the bottom of the China slowdown and we are just starting to feel the pinch on Iranian sanctions,” said Carl Larry at Oil Outlooks and Opinions. “Outside of another economic meltdown, there’s not much that we can see that is going to bring this oil price back down.” In other energy trading, heating oil was down 0.8 cents at $3.14 per gallon and gasoline futures fell 0.7 cents at $3.14 per gallon. Natural gas rose 0.1 cent at $2.01 per 1,000 cubic feet.

Oil prices slip, but thisis not a good sign for the global economy as it stems from the slowdown in the crisis-hit eurozone, which may lead to less crude consumption. The recent cabinet walk-out in the Netherlands adds to concerns A worker pumps petrol at a gas station in Quito, Ecuador. Global oil prices are extremely fragile due to the developments in the eurozone and the Middle East.