Forexpros – Crude oil futures extended sharp losses from the previous session on Monday, dropping to a one-week low as the dollar strengthened amid fears that the euro zone’s sovereign debt crisis is worsening.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at USD86.66 a barrel during European morning trade, dropping 1.41%.
The October crude contract is due to expire at the end of trading on Tuesday.
Meanwhile, the more actively traded contract for November delivery traded at USD86.90 a barrel, tumbling 1.45%. It earlier fell as much as 1.65% to trade at USD86.72 a barrel, the lowest price since September 12.
A meeting of European Union finance ministers in Poland over the weekend failed to produce an agreement on how to resolve the region’s ongoing debt crisis.
Fears over a possible Greek debt default also weighed on sentiment as EU ministers postponed a decision to release the next tranche of aid to the debt-laden country until next month.
The Wall Street Journal reported that Greek Prime Minister George Papandreou canceled a planned visit to the U.S. in order to hold crisis talks at home, while Greek media reported that Greece’s government held a cabinet meeting on Sunday to discuss how to plug a budget shortfall and avoid default.
Later in the day, officials from the EU and the International Monetary Fund were to hold talks with Greek Finance Minister Evangelos Venizelos to discuss whether Athens qualifies for its next tranche of aid.
The news saw risk aversion sharpen, boosting the greenback and weighing heavily on riskier assets, such as stocks and commodities.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.67% to trade at a three-day high of 77.56.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery edged 0.17% lower to trade at USD111.89 a barrel, up USD24.99 a barrel on its U.S. counterpart.
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