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Oil futures dip on Greek debt worries

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Futures for crude oil dropped in London and New York this afternoon amid a sell-off in equity markets on fears that the global economy could be on the brink of another meltdown, which could dramatically reduce energy demand.

The spotlight once again was on Greece after a senior member of German Chancellor Angela Merkel’s Christian Democratic Union Peter Altmaier told broadcaster ARD that Greece would not get more financial aid unless it passed more austerity laws.

Altmaier also discussed the possibility of Greece exiting the euro zone, saying it would be up to the Greeks whether to stay or quit.

Should Greece fail to convince its lenders including the European Union and the International Monetary Fund that it is doing enough to reduce its massive sovereign debt and miss on the next scheduled payout from Europe’s bailout fund, a default will likely be inevitable.

The markets fear that the first default by a euro zone state will result in severe consequences for the European economy.

It has also been speculated that Moody’s could downgrade the ratings of three major French banks, Societe Generale, BNP Paribas and Credit Agricole, due to their exposure to Greek debt.

To complicate matters further, the European Central Bank’s (ECB) chief economist Juergen Stark stepped down last Friday, reportedly due to his opposition to the bank’s bond-buying programme.

Stark’s resignation further weakened confidence in Europe’s ability to tackle its debt problems.

Oil faced more pressure from a stronger US dollar, which rallied against the euro after Europe’s single currency slipped on Greek jitters.

The surge in the greenback made the dollar-denominated crude more expensive for holders of other currencies.

US light, sweet crude for October delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), fell 25 cents to US$86.99/barrel in morning trade in New York.

October Brent crude slipped US$1.22 to US$111.41/barrel on the ICE Exchange this afternoon.

Today’s top risers in the oil and gas sector were:

Madagascar oil (LON:MOIL), up 11 percent at 28.35 pence at midday

Sound Oil (LON:SOU), up 7 percent at 2.46 pence

Max Petroleum (LON:MXP), up 6 percent at 14.3 pence

Empyrean Energy (LON:EME)
, up 5.5 percent at 6.85 pence

Roxi Petroleum (LON:RXP), up 4 percent at 3.5 pence

The top fallers were:

Resaca Exploitation (LON:RSOX)
, down 13 percent at 1.2 pence at midday

TXO (LON:TXO), down 12 percent at 0.664 pence

Desire Petroleum (LON:DES), down 10 percent at 19.14 pence

Caspian Holdings (LON:CSH)
, down 9.5 percent at 0.321 pence

Aminex (LON:AEX), down 7 percent at 6.18 pence

Quick facts: Brent Crude Oil

Price: - -

LSE:BRENT
Market: LSE
Market Cap: -
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