Forexpros – Crude oil futures traded sharply lower Friday, as Greece’s failure to meet the criteria to obtain its second economic bailout package counteracted bullish U.S. economic data.
On the New York Mercantile Exchange, light sweet crude futures for March settlement traded down 2.24% to USD97.61 a barrel.
It earlier hit a daily high of USD99.86 a barrel.
Strength in the U.S. dollar suppressed oil prices during the trading session.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gained 0.71% to trade at 79.25.
Dollar strength normally depresses commodity prices, as it decreases their appeal as an alternative asset and makes dollar priced commodities more expensive for holders of other currencies.
Earlier, risk appetite was fuelled when Greek officials reached an agreement on austerity measures needed to obtain a EUR130 billion bailout package.
The troika of the European Commission, the European Central Bank and the International Monetary Fund met in Brussels yesterday to determine if Greece has met its obligations to qualify for its second bailout package.
Things did not bode well for Greece at the meeting in Brussels, sending the oil lower on the session.
German Finance Minister, Wolfgang Schaeuble stated that Greece missed its debt cutting targets.
Schaeuble explained that two people who spoke on conditions of anonymity, who attended the Brussels meeting, stated that Greece’s austerity plan would leave its debt as high as 136% of gross domestic product by 2020.
The German Finance Ministry went on to state, “The Greek offer is not sufficient and they have to go away to come back with a revised plan.”
Greece is facing mounting opposition to the austerity measures needed to qualify for its second bailout package.
Greek Finance Minister Evangelo Venizelos stated that the parliamentary vote on the measures, set to begin this weekend, amounts to a ballot on euro membership.
Adding to the negativity, Fitch Ratings reiterated its opinion that Greece will default even if it obtains the bailout funds
Earlier, in oil bullish news, the United States saw a surprising decline in the number of first time unemployment claims last week. This solidifies hopes that the economic recovery is continuing in the world’s largest oil consuming nation.
Meanwhile, the IEA cut its 2012 global oil demand forecast for the sixth straight month, predicting oil consumption will increase by 800,000 barrels a day, or 300,000 less than previously estimated due to the euro zone debt crisis slowing growth.
In addition, OPEC reduced its estimates for crude oil consumption for 2012 by 120,000 barrels per day to 88.76 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for March delivery fell 1.66% to trade at USD116.61 a barrel, up USD18.98 on its U.S. Counterpart.
This nearly USD20.00 spread is approaching the record of USD27.00.
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