Oil prices plummeted in tandem with equities around the globe today as demand for riskier assets was dampened by reports that said Europe may already be preparing for a potential Greek exit from the euro zone.
In addition, German central bank Bundesbank released a statement, saying the fall-out from a Greek euro exit was manageable, while indicating that the country is unlikely to receive more financial aid if it fails to impose further spending cuts.
It was hoped that Germany would change its stance on common euro area bonds at today’s EU summit, however, that now appears to be highly unlikely.
A report by Bloomberg quoted deputy finance minister of Germany Thomas Steffen as saying that the German economy was not strong enough to underwrite the debts of Europe’s peripheral economies.
Today’s inventories data provided little support to crude futures, showing that oil stocks in the US added 0.9 million barrels last week, reaching 382.5 million barrels.
In the meantime, Iran agreed to let UN inspectors into the country and grant access to its military base in Parchin, which is allegedly used as a weapon test site.
The Middle Eastern country, which is accused of illegally developing a nuclear weapon, has been hit by a series of sanctions by Europe and the US, resulting in a decline in its oil exports.
US light, sweet crude for July delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), dropped US$1.17 to US$90.68/barrels in morning trade in New York.
July Brent crude slipped US$1.80 to US$106.61/barrel on the ICE Exchange this afternoon.
Today’s top risers in the oil and gas sector were:
Cove Energy (LON:COV), up 11.5 percent at 249.5 pence at midday
Bahamas Petroleum (LON:BPC), up 7.5 percent at 7.4 pence
Matra Petroleum (LON:MTA), up 5.5 percent at 2.6 pence
Gulfsands Petroleum (LON:GPX), up 5 percent at 103.25 pence
The top fallers were:
Frontera Resources (LON:FRR), down 12.5 percent at 0.661 pence at midday
PetroNeft (LON:PTR), down 8.5 percent at 7.1 pence
Oilex (LON:OEX), down 7 percent at 8.37 pence
Caza Oil & Gas (LON:CAZA), down 7 percent at 6.75 pence
Gold Oil (LON:GOO), down 5.5 percent at 5.07 pence