Forexpros – Crude oil futures extended heavy losses on Tuesday, tumbling to a six-day low after Greece’s surprise move to call a referendum on the recent bailout deal triggered fears over a debt default, dampening the appeal of riskier assets.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at USD90.53 a barrel during U.S. morning trade, plunging 2.85%.
It earlier fell by as much as 3.2% to trade at USD89.17 a barrel, the lowest price since October 24.
Greek Prime Minister George Papandreou announced a shock referendum on Greece’s bailout plan agreed on last Thursday at a summit of European leaders.
If Greece rejects the deal it would put the next tranche of aid to Greece in jeopardy, moving the country towards the brink of default and increasing the risk of contagion in global financial markets.
Crude prices came under further pressure after data released earlier showed that China’s official purchasing managers’ index for October fell to the lowest level since February 2009.
Meanwhile, the U.S. Institute for Supply Management said its index of purchasing managers declined to 50.8 from 51.6 the previous month, confounding expectations for a gain to 52.1.
The U.S. and China are the world’s two largest oil consuming nations and manufacturing numbers are used as indicators for fuel demand growth.
The downbeat outlook for global economic growth saw risk aversion sharpen, boosting demand for the safe-haven U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rallied for a second day, jumping 1% to trade at 77.41.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.
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 rose by 1.2 million barrels last week, while gasoline supplies were forecast to fall by 0.9 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery fell 1.88% to trade at USD107.50 a barrel, with the spread between the Brent and crude contracts standing at USD16.97 a barrel.
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