Forexpros – Crude oil futures slumped on Monday, retreating from a three-month high as ongoing concerns over the handling of the euro zone’s debt crisis coupled with a broadly stronger U.S. dollar dampened the appeal of commodities.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at USD93.72 a barrel during European morning trade, retreating 0.58%.
It earlier fell by as much as 0.9% to trade at a daily low of USD93.52 a barrel.
Over the weekend, Greek Prime Minister George Papandreou agreed to step down after an aborted plan to hold a national referendum on a European bailout package.
Papandreou will meet with opposition leader Antonis Samaras later in the day to decide the head of the new government, as well as its mandate and timeframe.
Investors were also focusing on Italy, after the country’s borrowing costs rose to a euro-era record earlier Monday, fanning fears that the region’s debt crisis will spill over to the single currency bloc’s third largest economy.
Prime Minister Silvio Berlusconi’s government faces a key parliamentary vote on Tuesday, amid growing opposition from within his own political party.
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 and gold.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.47% to trade at 77.48.
A stronger dollar makes U.S. commodities more expensive for importers holding other currencies such as yen or euro.
Crude prices rose to the highest level since August 2 on Friday after official data showed that the U.S. unemployment rate unexpectedly fell to a six-month low in October, boosting expectations for future oil-demand in the U.S.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery eased down 0.1% to trade at USD111.85 a barrel, with the spread between the Brent and crude contracts standing at USD18.13 a barrel.
Chairman of Libya’s National Oil Corporation Nouri Berrouin said over the weekend that the country’s oil output has risen to 567,000 barrels per day.
Libya, Africa’s biggest holder of crude oil reserves, has the capacity to produce roughly 1.6 million barrels of crude a day.
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