Forexpros – Crude oil futures came under selling pressure on Monday, as concerns over the global economic outlook outweighed persistent fears over a disruption to supplies from Iran.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD106.08 a barrel during European morning trade, shedding 0.53%.
It earlier fell by as much as 0.65% to trade at a daily low of USD106.03 a barrel.
Concerns over a slowdown in Chinese economic growth and its impact on the Asian nation’s oil demand weighed.
In a speech to the National People’s Congress in Beijing earlier, Chinese Premier Wen Jiabao said the government will target an expansion of 7.5% this year and set an inflation target of 4%. The government had an 8% goal from 2005 to 2011.
China is the world’s second largest consumer after the U.S. and has been the engine of strengthening demand.
A deeper slowdown in China, the world’s second-biggest economy, would impair a global expansion that is already faltering because of Europe’s debt crisis.
Concerns over Greece’s debt burden persisted ahead of the March 8 deadline for bondholders to join the agreement under which they will exchange their existing Greek government bonds for new paper in a swap deal.
There is uncertainty over how much participation Greece will see for its bond swap. At least 66% of private sector bondholders must be willing to participate in the deal.
A failure to agree on the swap would put the country back on the brink of a messy sovereign debt default.
But losses were limited as prices continued to draw support from ongoing tension between Iran and the West and a potential disruption to oil supplies from the region.
In a speech Sunday, U.S. President Barack Obama said he would not hesitate to attack Iran to keep it from getting a nuclear bomb. His comments come ahead of a meeting with Israeli Prime Minister Benjamin Netanyahu in Washington DC later Monday.
The two countries have previously stated that all options are on the table in ensuring the Islamic Republic does not acquire atomic weapons.
There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.
Iran produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the OPEC, after Saudi Arabia.
Meanwhile, U.S. pipeline operator Enbridge said that a major oil pipeline in the U.S. Midwest will be shut down for several days after a spill and fire was caused by a car accident.
The pipeline was shut down within hours of the accident early Saturday morning and will remain closed until Thursday morning, an Enbridge spokeswoman said. The downed Enbridge pipeline normally transports 317,000 barrels of oil a day.
Global financial service provider HSBC Holdings said in a report earlier that, “Oil is the new Greece.”
Investors “have quickly found a new source of anxiety thanks to the recent surge in oil prices. If the trend persists, a fragile economic recovery in the developed world could quickly be derailed and inflation could return to emerging markets,” the bank said in a report.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery shed 0.17% to trade at USD123.43 a barrel, with the spread between the Brent and crude contracts standing at USD17.35.
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