Crude drops on fears Spain is in need of bailout
Published Jul 20, 2012 12:59PM ET
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at USD91.42 a barrel on Friday, down 1.67%, off from a session high of USD92.62 and up from an earlier session low of USD90.94.
Yields on the Spanish 10-year government note soared above the 7% threshold deemed unsustainable by the markets on fears Spain will need sovereign rescue funding.
Spanish Budget Minister Cristobal Montoro said earlier that the recession gripping the country today will extend into next year, with gross domestic product falling 0.5 percent in 2013 instead of expanding 0.2 percent as originally forecast.
Oil fell on the news, as an economy in trouble will need less fuels and energy.
The dollar surged as the euro tanked on the news, which further pushed oil down, as the commodity often trades inversely from the greenback.
Oil reversed some earlier losses on reports that eurozone finance ministers granted Spain a EUR100 billion bailout for its banking sector as well as for regional governments, though investors feared the country will need a sovereign rescue as well, which fueled the heavy risk-off trading session.
European financial worries overshadowed otherwise bullish pressures from Mideast tensions after an attack on Israeli citizens in Bulgaria, which Israel says was orchestrated by Iran.
On the ICE Futures Exchange, Brent oil futures for September delivery were down 1.34% and trading at USD106.36 a barrel, up USD14.94 from its U.S. counterpart.
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Written By: Investing.com
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