Brent steady at $108 after steep fall
Singapore, November 18, 2011
Brent crude held steady at $108 a barrel on Friday, after posting steep losses in the previous session on concerns over demand growth as Europe struggles to keep its debt crisis from spiralling out of control.
Markets are worried about borrowing costs rising to unsustainable levels for nations such as France and Spain, even as Italy pledged to embark on fiscal reforms. Asian shares fell for a fourth day, and base metals slumped as investors exited riskier assets.
Brent crude traded 9 cents higher at $108.31 a barrel by 0456 GMT, after slipping as low as $107.51. US oil fell 28 cents to $98.54, after sliding to $98.01.
"The pullback that we have seen shouldn't come as a surprise, as the euro zone crisis and the ballooning costs are having an impact across the board," said Ben Le Brun, market analyst at OptionsXpress. "Markets are just trading from one headline to the next."
Brent is poised for a weekly fall of 5.4 percent, its steepest decline since the week ended Sept. 24, and reversing three weeks of gains. U.S. oil may post a weekly fall after six weeks of gains.
Oil prices tumbled in the previous session as investors booked profits a day after a surge to five-month highs tested key technical levels. The U.S. benchmark settled down 3.67 percent, the biggest one-day percentage loss for front-month crude on the New York Mercantile Exchange since September 28. Brent dropped 3.27 percent.
Italy's new technocrat prime minister, Mario Monti, outlined a raft of policies including pension and labour market reform, a crackdown on tax evasion and changes to the tax system in his maiden speech to parliament.
That didn't help soothe investor worries as Spain was forced to pay the highest borrowing costs since 1997 at a sale of 10-year bonds.
"The losses seen overnight in Europe moved their way through the US markets," Ben Taylor at CMC Markets said in a report. "A move through key support levels suggests further falls."
Apart from Europe, investors are also worried about the outlook of growth in the world's top oil consumer the United States, despite a series of recent positive economic numbers.
A 12-member "super committee" has until November 23 to reach a deal to cut US deficits by at least $1.2 trillion over 10 years. If the panel is unable to come up with a deficit reduction plan, automatic spending cuts would kick in across federal agencies, beginning in January 2013, two months after next year's election. - Reuters