U.S. crude futures slumped Monday along with global stock markets and
the euro, as investors grow skeptical that a European Union summit will
help stem the continent's debt crisis.
Light, sweet crude for August delivery recently traded $1.02,
or 1.3%, lower at $78.74 a barrel on the New York Mercantile Exchange.
Brent crude on the ICE futures exchange for August delivery traded 72
cents lower at $90.26 a barrel.
Europe's leaders are set to meet later this week to discuss
the potential renegotiation of Greece's bailout terms and proposals to
create a banking union.
But stocks, crude-oil and the euro are falling ahead of the
meeting on worries that little progress will be made towards turning
around the EU's deteriorating debt situation.
European stock markets fell, while the Dow Jones Industrial
Average was recently down 1% to 12,518. The euro dropped to $1.24907
from $1.25740 in the previous session.
EU problems are likely to push oil to new lows over the next
month, said oil-trading adviser Jim Ritterbusch of Ritterbusch and
Associates.
"A lack of cohesive effort in addressing severe debt problems
within southern euro-zone countries could force a renewed upswing in the
dollar that could weigh further on oil values," Ritterbusch said in a
client note.
A strengthening dollar against the euro typically weighs on
oil prices, as it makes crude more expensive for buyers in other
currencies.
Crude prices are trading below $80 a barrel for the
third-straight session, near the lowest level since October. After
trading above $105 a barrel in May, rising supplies and fears that
Europe's crisis could threaten the global economy have sent traders
fleeing from bets on higher prices.
Meanwhile, Tropical Storm Debby has turned to the northeast in
the Gulf of Mexico, avoiding the offshore oil-producing areas off the
coast of Texas and Louisiana. Several companies had shut-down oil and
natural gas production in the region ahead of the storm.
The National Hurricane Center on Monday said Debby is likely
to remain stationary off the coast of the Florida panhandle, and winds
are decreasing.
"The cyclone does not seem to be going anywhere anytime soon,"
the NHC said.
Front-month July reformulated gasoline blendstock, or RBOB,
recently traded 2.64 cents higher at $2.5963 a gallon. July heating oil
recently traded 1.68 cents lower at $2.5169 a gallon.