Fear Over Oil Prices Prices Amid the Euro Concerns
13th December 2011
Brent crude was little changed above $107 today December 13, 2011, after falling in the previous session, on concerns of demand growth as investors worried last week's pact by European leaders may not be enough to stop the region's debt crisis from worsening.
The worries echoed across financial markets. Asian stocks sank, the euro languished near a two-month low, gold plunged to a seven-week low and copper fell after posting its biggest decline in three weeks. Oil will be driven by headlines on Europe's fiscal condition and an upcoming Opec meeting, with support coming from supply uncertainties in the Middle East.
Brent rose 6 cents to $107.32 a barrel, after sliding to as low as $107.07 and settling down $1.36. US crude gained 17 cents to $97.94, after settling $1.64 lower, trading below $100 for a third day.
Friday's optimism over the European summit deal to strengthen budget discipline was overshadowed by its shroud of legal uncertainty and the absence of an unlimited financial backstop for the single currency.
The uncertainty worsened after ratings agency Moody's said it would review ratings of all EU member states in the first quarter of 2012, while rival Fitch said the summit had failed to provide a "comprehensive" solution to the debt crisis.
Oil investors are awaiting the outcome of a meeting of producer group Opec. The group yesterday targeted a new 30-million barrel-a-day production deal aimed at healing the rift left by a bad-tempered failure to reach an output agreement when it last met in June.
At stake for the Organization of the Petroleum Exporting Countries when it meets today is a credible policy going into a year when a sluggish global economy could undermine fuel demand and send oil prices tumbling from over $107 a barrel now.
Without a collective supply target, Opec members with spare capacity - Saudi Arabia and its Gulf Arab allies - remain free to pump at will.