Forexpros –
Forexpros – Crude oil futures moved lower Monday, after hitting the highest levels of the session, as the initial relief greeting the Spanish bailout news for its banking sector gave way to concerns over the ongoing debt crisis in the euro zone.
Oil futures remained supported after data over the weekend showed China’s oil imports rose to a record high in May. Concerns over a breakdown in talks between Iran and Western powers lent further support.
On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded at USD82.91 a barrel during U.S. afternoon trade, falling 1.50%.
It earlier advanced by as much as 3% to trade at USD86.64 a barrel, the highest since June 7, when prices touched USD87.00.
Oil futures rallied earlier after Spain’s Finance Minister Luis de Guindos said the European Union agreed to grant Madrid a loan of up to EUR100 billion, which the government will use to recapitalize the country’s ailing banking sector.
However, investors dumped oil as details of the Spanish bailout agreement remained unclear, with the exact amount Spain is to receive still be decided, after the results of independent banking audits are published later this month.
Spanish Prime Minister Mariano Rajoy on Sunday expressed hope that the bailout would help the country’s ailing economy, but he warned against expecting a quick turnaround following the banking rescue.
Concerns about Spain’s banks have grown since Bankia, the country’s fourth-largest lender, said last month it needed EUR19 billion in state aid to shore itself up against bad loans.
Spain is the fourth euro nation to seek a rescue, after Greece, Portugal and Ireland. A financial crisis has gripped Spain since 2008, when a real estate bust caused big losses for many banks.
Meanwhile, uncertainty over the outcome of a Greek general election on June 17, which could determine the course of the country’s future in the euro zone, also weighed on sentiment.
The U.S. dollar moderated losses against the euro, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.3% to trade at 82.65, after being down by as much as 0.8% earlier.
Oil prices remained supported after official trade data released over the weekend showed that China imported a record-high 25.3 million metric tons of crude in May, or 5.98 million barrels a day, up 10% from April.
The previous record was 5.87 million barrels a day in February.
China is the world’s second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery was down 1.17% to trade at USD 97.85 a barrel, with the spread between the Brent and crude contracts standing at USD15.11.
Oil traders will now shift their attention to Thursday’s meeting of the Organization of Petroleum Exporting Countries in Vienna. The agency supplies nearly 40% of the world’s crude.
OPEC most recently said it was pumping 32.4 million barrels a day of oil, a level not seen since the summer of 2008 and 2.4 million barrels more than the official 30-million-barrel-limit agreed to at the last meeting in December.
Market analysts expected to choose to keep output high as tightening sanctions reduce oil output in Iran. The country is OPEC’s second-largest producer behind Saudi Arabia, which has boosted output to account for the decline in Iranian exports.
Iran and Venezuela have recently criticized other members of the cartel for producing more than the existing quota.
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