Forexpros – Crude oil futures were modestly lower on Tuesday, after ratings agency Standard & Poor’s placed the AAA long-term credit rating of the European Financial Stability Facility on watch for a possible downgrade, a day after it also put 15 euro zone countries on review.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at USD100.69 a barrel during early U.S. morning trade, slumping 0.3%.
It earlier fell by as much as 0.7% to trade at a daily low of USD100.22 a barrel.
S&P said earlier that it placed the EFSF’s, the euro zone’s bailout fund, long-term triple-A ratings on watch, adding that the fund’s long-term rating may be cut by 1 or 2 notches on review.
“Depending on the outcome of our review of the ratings on EFSF member governments, we could lower the long-term rating on the EFSF by one or two notches, if any,” S&P said in a statement released earlier.
The warning comes a day after the ratings agency warned it may downgrade the ratings of 15 euro zone countries, included AAA-rated Germany and France within 90 days, depending on the outcome of Friday’s critical European Union summit.
Earlier Tuesday, German Chancellor Angela Merkel said European Union leaders will take important decisions to stabilize the euro zone at a summit later this week, brushing off S&P’s warning.
The euro zone accounted for nearly 16% of global oil consumption in 2010, according to data from British Petroleum.
Crude prices continued to draw support from ongoing tensions over Iran’s nuclear program and a potential disruption to oil exports from the country.
Last week, the U.S., the U.K. and the European Union tightened their sanctions against the Middle Eastern country, following a United Nations report which concluded that the Iranian government was working on a nuclear weapon.
Iran is the world’s fourth largest oil producer, pumping nearly 5% of the world’s oil in 2011 and the second biggest exporter among the Organization of the Petroleum Exporting Countries.
Meanwhile, markets were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 1.1 million barrels last week, while gasoline supplies were forecast to increase by 1.0 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery eased up 0.08% to trade at USD109.89 a barrel, with the spread between the Brent and crude contracts standing at USD9.20 a barrel.
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