Oil falls on debt woes

Updated: 2011-11-22 09:18


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NEW YORK - US crude oil price fell on Monday as the United States and Europe struggled to deal with their lingering debt problems.

Before the Thanksgiving holiday, investors started to pull money from crude markets. Fears of slowing-down economic growth in US and Europe also drove investors away from risk assets.

The US and EU, two big oil consumers, were suffering from great uncertainties caused by debt woes. The congressional "super committee" which was set to cut 1.2 trillion dollars of US deficit over next 10 years, was supposed to declare a failure in reaching an agreement before the deadline on Wednesday.

And in Europe, increasing signs showed debt crisis has spread to the core Europe. Moody's Investors Service Inc. warned on Monday that France's credit outlook faced threats as its government financing cost rose and economic growth prospective dimmed.  

Spanish, Italian, French and Belgian government bond yields all rose as worried investors fled into the safe haven of German bonds.

Economists predicted that world economy would slow down this year and keep weakening in 2012. This hurt oil demand expectation and pressured on the crude markets.

But there were rising tensions in the oil-rich Middle East. Tension over Iran's nuclear program and unrest in Egypt and Syria caused concerns about oil supply from this region.

Light, sweet crude for January delivery dropped 75 cents, or 0.77 percent to settle at 96.92 dollars a barrel on the New York Mercantile Exchange. And in London, Brent crude for January delivery slipped 68 cents, or 0.63 percent to close at 106.88 dollars a barrel.