Thursday, September 27, 2012

Oil prices Tumble on Eurozone Worries - USO, UNG, SU, BP plc, MRO, TOT

Oil prices tumbled on Wednesday on fresh worries over a revival in the Euro economic zone and global demand though indications of an escalation in tension between the West and Iran over its nuclear programme capped losses for the Brent crude prices.

Brent November crude fell 41 cents to $110.04 a barrel, after stumbling to $108.45.

Brent had fallen to a six-week low of $107.10 last Thursday, but so far the looks like it will remain on track this week to post a 12 percent gain for the third quarter, after dropping 20 percent in the previous quarter.

U.S. November crude tumbled $1.39 to settle at $89.98 a barrel, below its 100-day moving average of $90.27 and the lowest settlement and first under $90 since August 2, Reuters reported.

Wednesday's session low of $88.95 was its lowest since prices hit $87.23 intraday on August 3.

The apprehensions over reduced demand for oil stemmed from concerns that the stimulus provided by the U.S. government might not be enough to trigger a revival in the economy of the country, much less the world economy.

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Spain, which had given hopes last week that i is on its way to implement austerity measures as suggested by the ECB bond buying programme, revealed on Wednesday that its borrowing costs had gone up.

Protests against the imposition of austerity measures in Madrid and announcement of elections in the economically critical region of Catalonia only added to the woes.

A fall in oil inventories according to data released on Wednesday also failed to boost prices.

U.S. gasoline inventories fell 481,000 barrels against expectations they would be up slightly, putting total U.S. stocks and East Coast inventories at their lowest since October 2008, according to data from the U.S. Energy Information Administration.

United States Oil Fund LP (ETF)(NYSEARCA:USO) fell 1.21% to $33.34, while United States Natural Gas Fund, LP(NYSEARCA:UNG) rose 2.55% to $20.52.

Suncor Energy Inc. (USA)(NYSE:SU) fell 1%, TOTAL S.A. (ADR)(NYSE:TOT) slid 1.85%, BP plc (ADR)(NYSE:BP) fell 1.50% to $42.37 and Marathon Oil Corporation(NYSE:MRO) declined 1.53%.

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