Oil prices hold at lows
NEW YORK – The price of oil is holding near seven-month lows following warnings of a “severe recession” in Europe and easing tensions over Iran’s nuclear program.
Benchmark US crude lost 13 cents to US$92.44 per barrel in morning trading in New York while Brent crude added 27 cents to US$109.08 per barrel in London.
Oil prices have declined almost every day this month as political changes in Greece and France threatened existing plans to fix the eurozone economy. The Organisation for Economic Cooperation and Development says Europe, which consumes 18 per cent of the world’s oil, could fall into recession this year if leaders fail to stimulate the economy
Meanwhile, analysts say Iran’s oil exports could keep flowing if it lets international inspectors into its nuclear facilities as part of a new deal.
By early afternoon in Europe, benchmark oil for June delivery was down 44 cents to US$92.13 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose US$1.09 to settle at US$92.57 in New York on Monday.
In London, Brent crude for July delivery was up 14 cents at US$108.95 per barrel on the ICE Futures exchange.
Crude has slumped from US$106 earlier this month on fears that global economic growth might slow more than expected this year. In Europe, government austerity measures meant to lower debt have been crippling growth in many large economies like Italy and Spain.
Also hurting energy prices yesterday was a rise in the dollar, which tends to push down oil prices by making crude more expensive for investors trading in other currencies. The euro slipped to US$1.2758 from US$1.2793 late Monday in New York, while the dollar rose to 79.77 yen from 79.36 yen after Fitch lowered Japan’s sovereign debt rating.
Meanwhile, the head of the International Atomic Energy Agency, Yukiya Amano, said Tuesday that Iran had agreed to let IAEA inspectors to resume their investigation into its nuclear program. On Wednesday, talks are set to start in Baghdad between Iran and six world powers about the country’s uranium enrichment efforts and its suspected intent to develop nuclear weapons. Prices had risen in previous months due to international tensions over Iran, which had threatened to block oil shipments out of the Persian Gulf.