Forexpros – Crude oil futures edged lower on Tuesday, as lingering concerns over the debt crisis in the euro zone prompted investors to move out of high yielding assets.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at USD97.83 a barrel during European morning trade, shedding 0.4%.
It earlier fell by as much as 0.5% to trade at a daily low of USD97.72 a barrel.
Market sentiment was dented after the yield on Italian five-year bonds spiked to a euro-era high of 6.29% on Monday, in the first Italian bond sale since former European Commissioner Mario Monti was appointed prime minister.
Italian 10-year bond yields continued to inch higher on Tuesday, hitting 6.91%, re-approaching the 7% threshold, a level widely considered unsustainable for continued borrowing.
Adding to concerns over the region’s debt crisis, the yield on 10-year Spanish government bonds rose to 6.28%, the highest since early August, while French 10-year bonds reached 3.53%, the highest since May 5.
The news prompted investors to shun riskier assets, such as stocks and commodities, and flock to traditional safe haven assets like the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.5% to trade at 78.03.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Meanwhile, Algeria’s Oil Minister Youcef Yousefi said that the current oil price “has no major negative impact on the global economy”. Speaking at an industry event in Qatar, Yousefi said that a price of around USD100 to USD110 a barrel is “fair for producers and consumers.”
The Algerian minister declined to comment on what OPEC ministers should do when they meet in Vienna next month, saying “we have to study the situation when we meet in one month.”
OPEC-member Algeria produced 1.2 million barrels of oil per day in October and has a production capacity of 1.5 million barrels per day, according to Yousefi.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery added 0.24% to trade at USD111.55 a barrel, with the spread between the Brent and crude contracts standing at USD13.72 a barrel.
Forexpros
