Oil prices fall on eurozone

Oil prices fell on Tuesday owing to fresh worries about the eurozone debt crisis after leadership changes in France and particularly Greece spotlighted uncertainty about austerity and growth. Expectations of an increase in US crude stockpiles, which would indicate weaker energy demand, also contributed to bearish sentiment, analysts said. New York crude hit $95.34 a barrel — the lowest point since late December. New York’s main contract, West Texas Intermediate (WTI) crude for delivery in June later recovered somewhat to stand at $96.94, but still down $1.04 compared with Monday’s close. Brent North Sea crude for June meanwhile struck a three-month low point of $111.25 on Tuesday before recovering to $112.47, down 69 cents. “European election results revived worries about the eurozone debt crisis, reinforcing anxiety about anaemic economic growth and petroleum demand,” said Phillip Futures in a market commentary. The results in France and Greece “raised doubts about the region’s ability to proceed with austerity measures seen as crucial to addressing soaring debt and a contracting economy,” it added. Voters in both countries displayed their discontent with austerity measures by flocking to candidates and political parties which have called for an easing of belt tightening in the embattled 17-nation euro bloc. In France, Socialist Party candidate Francois Hollande ousted President Nicolas Sarkozy, becoming the first socialist in 17 years to lead the country. In Greece, mainstream parties that supported an EU-IMF bailout of the debt-strapped country lost control of parliament. Oil prices were also facing downside pressure from expectations of a spike in US crude stockpiles for the seventh consecutive week, indicating faltering demand in the world’s top oil user, according to analysts. The weekly inventory report from the US Energy Department is due Wednesday. “US crude stockpiles may have risen to levels not seen for more than 20 years which has softened prices,” said Justin Harper, market strategist at IG Markets Singapore. Kuwait’s Oil Minister Hani Hussein said in comments published Tuesday that $100 a barrel is a “fair” price for oil justified by market forces, but that geopolitical events were pushing the price higher. But Saudi Arabia said prices were too high. “Oil prices are still too high,” Saudi Oil Minister Ali Naimi told reporters in Tokyo. He also reiterated that the kingdom was very well-equipped to fill any gap between global supply and demand thanks to its ample spare crude-oil output capacity and oil stocks. “We have 2.5 million barrels a day of spare capacity, and 80 million barrels of stocks,” said Naimi, adding that his country was producing around 10 million barrels of crude oil a day.