Forexpros – Crude oil futures declined on Tuesday, a day after a strong rally that took prices above USD100-a-barrel, as investors eyed a meeting of euro zone finance ministers in Brussels later in the day.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at USD97.74 a barrel during European morning trade, dropping 0.48%.
It earlier fell by as much as 0.65% to trade at a daily low of USD97.23 a barrel.
Finance ministers from the 17 European Union member states were to meet in Brussels later in the day to discuss the region’s ongoing financial crisis and ways to boost the firepower of the European Financial Stability Facility. The ministers were also expected to sign off on Greece’s next tranche of financial aid.
Also Tuesday, Italy was scheduled to auction up to EUR8 billion in ten-year bonds, in what was being seen as a key test of investor confidence in Italian debt.
The country’s ten-year yields climbed to 7.38% ahead of the auction, re-approaching a euro-lifetime high of 7.46% hit on November 9.
Meanwhile, French newspaper La Tribune reported earlier that ratings agency Standard & Poor’s could downgrade the outlook on France’s triple-A credit rating to negative within a week to 10 days.
Citing several unnamed sources, the newspaper said that the move by S&P could come “shortly”.
Adding to concerns over the global economic outlook, ratings agency Fitch downgraded its credit outlook for the U.S. to negative late Monday, following a congressional committee’s failure to agree on deficit cuts.
The ratings agency gave the U.S. until 2013 to come up with a “credible plan” to tackle its budget deficit or risk a downgrade of its AAA rating.
The U.S. is the world’s largest oil consumer, while the euro zone as a region is the third largest. Together they accounted for nearly 39% of global oil consumption in 2010, according to data from British Petroleum.
Crude prices rallied to USD100.73 a barrel on Monday, as prices were boosted by hopes European leaders will reach a deal to contain the region’s debt crisis and amid growing fears over a disruption to Iranian supplies.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery shed 0.15% to trade at USD108.84 a barrel, with the spread between the Brent and crude contracts standing at USD11.10 a barrel.
Libya’s state-run National Oil Corporation said Monday that the county’s oil output now exceeds 750,000 barrels a day. Libya had been producing about 1.6 million barrels a day nationally until the outbreak of civil war earlier in the year.
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