Oil futures declined Monday, as Greece's debt crisis and the
decision to tap global oil reserves continued to weigh on prices.
Light, sweet crude for August delivery traded down $1.11, or 1.3%, to $90.05,
on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe
exchange fell $1, or 0.1%, to $104.12 a barrel.
Global markets are on edge as the Greek parliament votes later this week on
additional austerity measures aimed at tackling the country's debt crisis. The
failure to pass the unpopular cuts would jeopardize the receipt of another
bailout from its European neighbors, a prospect that has spurred concerns about
the economic health of the euro zone and crude-oil demand more broadly.
"Once again the Greece crisis and the uncertainty surrounding Greece is
going to weigh on oil," said Phil Flynn, oil analyst at PFG Best in
Chicago.
Meanwhile, analysts have pointed to $90 a barrel for the Nymex contract as an
important threshold for the market. A sustained move below that level would
open the door for additional declines, they have said.
"We've been defending $90 pretty good," Flynn said. "If we close
below $90, that could open up the floodgates."
The Nymex contract moved in lockstep with Brent prices Monday, in contrast to
last week's steep sell-off in the Brent market. The European benchmark's
retreat has been more pronounced since the International Energy Agency
announced Thursday its 28 members would release 60 million barrels oil from
global reserves.
Traders believe the IEA's decision will help ease the supply shortfall in
Europe caused by the disruption of Libyan exports. Brent crude's premium over
the Nymex West Texas Intermediate contract was under $14 a barrel Monday.
The two contracts have historically traded just a few dollars apart, but the
Brent contract has soared to a premium as high as $22 a barrel recently due to
the Libyan conflict, disruptions to North Sea production and an inventory glut
in the central U.S.
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The IEA's decision has prompted ire from major oil producers, who worry
that
the influx of crude will weaken prices. On Monday, Iran's
oil
minister accused the IEA of breaching its own principles by intervening
in
what he said is a well-supplied oil market.
"There is no additional need for supply on the market," Mohammad
Aliabadi said on the sidelines of an energy summit.
Front-month July reformulated gasoline blendstock, or RBOB, recently fell 1.8
cents, or 0.7%, to $2.7586 a gallon. July heating oil fell 0.51 cent, or 0.2%,
to $2.7452 a gallon