Investor concern regarding the ongoing debt crisis and slow economic growth is likely to increase now that oil prices have reached $103 per barrel in Asia.
June delivery’s benchmark oil had fallen 13 cents to $102.98 a barrel on the New York Mercantile Exchange, and the contract later fell 77 cents to $103.11. Meanwhile, Brent crude oil is up 15 cents at $118.87 a barrel in London.
The Eurozone’s manufacturing and service sectors fell this past month, strengthening the claim that the new measures instituted to reduce debt will result in yet another recession.
“Developments in the euro area continue to drive sentiment,” said Standard Chartered’s Gerald Lyons. “The biggest threat facing the world economy is a collapse of one or more euro area economies.”
Analysts are torn regarding crude demand, but many are optimistic that the market will rebound in both China and the U.S. The Western sanctions against Iran’s oil will also be a contributor to market shifts.
“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 Oil Outlooks and Opinions’ Carl Larry. “Outside of another economic meltdown, there’s not much more that we can see that is going to bring this oil price back down.”
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