Oil prices fell to their lowest in three months on Concerns that Greece’s rejection of the Euro zone’s bailout terms and China rolling out emergency funds to support its stocks would hurt demand and that Iran’s impeding agreement would increase the supply worsening the glut.
Light sweet crude for august delivery most recently declined by $3.68 or 6.36% to $53.27 a barrel on the New York mercantile Exchange. Based on the most active contracts, prices for the US benchmark have nit settled this low since April.
Brent for August delivery, the global benchmark, most recently declined by $2.85 or 4.72% to $57.47 a barrel on the London ICE Futures Exchange.
“All signs point south for oil prices,” Capital Economics told the Wall Street Journal.
China’s stock has plunged in the recent past, a bearish sign for demand in the world’s second largest consumer of crude.
Iran is also pushing ahead for a nuclear deal with the world powers ahead of the July 7th deadline.
Most traders expect the deal, if reached, to prompt the world powers to lift economic sanctions against the Islamic state which will in turn increase its crude exports worsening the already existing oil glut.
Also spelling doom for the commodity’s outlook is Greece’s resounding vote against austerity measures suggested by Europe as part of its bailout deal. The vote increases the possibility of fallout in the Euro zone potentially hurting the demand of the commodity.
“Even without Greece, China’s stock market woes and Iran priming to hit the market with more barrels, the demand picture in oil has only been okay while the supply picture has been phenomenal,” John Kilduff, partner at New York energy hedge fund Again Capital, told Reuters.
“With these number of bearish elements weighing on the market now, the only thing of support has been the seasonal demand in gasoline, and even that will be going away soon.”
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