Investing.com - Crude oil futures edged mildly higher during U.S. morning hours on Tuesday, but held below USD80-per-barrel amid sustained concerns over the debt crisis in the euro zone.
Oil traders continued to monitor the path of Tropical Storm Debby, as well as rising geopolitical tension over Syria.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD79.49 a barrel during U.S. morning trade, gaining 0.35%.
It earlier fell by as much as 0.6% to trade at a session low of USD78.72 a barrel. Prices touched and eight-month low of USD77.56 a barrel on June 22.
Market sentiment soured after Spain saw short-term borrowing costs double at an auction of government debt earlier in the day.
Spain’s Treasury auctioned EUR1.6 billion worth of three-month government bonds, slightly more that the targeted amount, at an average yield of 2.36%, up sharply from 0.84% in May. Spain also sold EUR1.48 billion of six-month debt at an average yield of 3.23%, up from 1.73% in May.
Following the auction, the yield on Spanish 10-year bonds rose to 6.73%, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
On Monday, Moody’s ratings agency on Monday downgraded 28 Spanish banks, citing concerns over Madrid’s ability to support its banking sector, which the agency said was vulnerable to further losses from Spain's real-estate bust.
The announcement came after Spain’s government formally requested aid of up to EUR100 billion for its banks from its euro zone partners.
Meanwhile, Italy’s Treasury sold EUR2.99 billion worth of two-year bonds at an average yield of 4.71%, the highest since December.
Sentiment on the euro also remained fragile amid doubts over whether an upcoming European Union summit will result in fresh measures to tackle the region’s debt crisis.
On Monday, German Chancellor Angel Merkel quashed hopes that the euro zone could issue joint euro bonds, saying the idea was "economically wrong" and "counterproductive."
There are worries that the region’s worsening sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Meanwhile, oil traders continued to monitor the path of Tropical Storm Debby, as it mostly avoided the Gulf of Mexico’s energy-producing area.
Oil drillers in the Gulf of Mexico, including Conoco Phillips and British Petroleum, shut about 44% of output in the Gulf as a precaution ahead of Tropical Storm Debby.
Energy traders track tropical storm activity in the event it disrupts production in the Gulf of Mexico, which is home to 20% of U.S. oil production.
Prices found some support after NATO member states condemned Syria for its shooting down of a Turkish military jet last week and Ankara warned Damascus against any further military moves.
Oil traders were also looking ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 0.7 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery rallied 1.45% to trade at 92.34 a barrel, with the spread between the Brent and crude contracts standing at USD12.85.
Prices fell to as low as USD88.49 a barrel on June 22, the lowest since December 20, 2010.
London-traded Brent prices are down nearly 27% since hitting an intraday high of USD128.38 on March 1, as an escalating debt crisis in the euro zone and worries over a deeper-than-expected slowdown in Chinese economic activity dragged prices lower.
Oil traders continued to monitor the path of Tropical Storm Debby, as well as rising geopolitical tension over Syria.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD79.49 a barrel during U.S. morning trade, gaining 0.35%.
It earlier fell by as much as 0.6% to trade at a session low of USD78.72 a barrel. Prices touched and eight-month low of USD77.56 a barrel on June 22.
Market sentiment soured after Spain saw short-term borrowing costs double at an auction of government debt earlier in the day.
Spain’s Treasury auctioned EUR1.6 billion worth of three-month government bonds, slightly more that the targeted amount, at an average yield of 2.36%, up sharply from 0.84% in May. Spain also sold EUR1.48 billion of six-month debt at an average yield of 3.23%, up from 1.73% in May.
Following the auction, the yield on Spanish 10-year bonds rose to 6.73%, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
On Monday, Moody’s ratings agency on Monday downgraded 28 Spanish banks, citing concerns over Madrid’s ability to support its banking sector, which the agency said was vulnerable to further losses from Spain's real-estate bust.
The announcement came after Spain’s government formally requested aid of up to EUR100 billion for its banks from its euro zone partners.
Meanwhile, Italy’s Treasury sold EUR2.99 billion worth of two-year bonds at an average yield of 4.71%, the highest since December.
Sentiment on the euro also remained fragile amid doubts over whether an upcoming European Union summit will result in fresh measures to tackle the region’s debt crisis.
On Monday, German Chancellor Angel Merkel quashed hopes that the euro zone could issue joint euro bonds, saying the idea was "economically wrong" and "counterproductive."
There are worries that the region’s worsening sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Meanwhile, oil traders continued to monitor the path of Tropical Storm Debby, as it mostly avoided the Gulf of Mexico’s energy-producing area.
Oil drillers in the Gulf of Mexico, including Conoco Phillips and British Petroleum, shut about 44% of output in the Gulf as a precaution ahead of Tropical Storm Debby.
Energy traders track tropical storm activity in the event it disrupts production in the Gulf of Mexico, which is home to 20% of U.S. oil production.
Prices found some support after NATO member states condemned Syria for its shooting down of a Turkish military jet last week and Ankara warned Damascus against any further military moves.
Oil traders were also looking ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 0.7 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery rallied 1.45% to trade at 92.34 a barrel, with the spread between the Brent and crude contracts standing at USD12.85.
Prices fell to as low as USD88.49 a barrel on June 22, the lowest since December 20, 2010.
London-traded Brent prices are down nearly 27% since hitting an intraday high of USD128.38 on March 1, as an escalating debt crisis in the euro zone and worries over a deeper-than-expected slowdown in Chinese economic activity dragged prices lower.