Ongoing debt crises in Europe and US keeps skittish investors away from risky assets
Brent crude dipped below $117 a barrel on Monday as the
ongoing debt crises in Europe and the United States kept skittish investors
away from risky assets, while the possibility of a second IEA oil release also
weighed on sentiment.
Policymakers on both sides of the Atlantic have offered no
clear solutions to markets on their respective debt problems, keeping investors
Brent fell 31 cents to $116.95 a barrel at 0354 GMT, while US
crude eased 22 cents to $97.02 a barrel.
The International Energy Agency, which needs the backing of
all 28 members if it is to pour more oil on a volatile crude market, is
expected to confer with its member countries by July 23 to decide whether to
draw further on emergency oil stocks. Last month, member countries released 60
million barrels, only the third such move in the IEA's history.
The IEA stock release had driven Brent prices down to
$102.28 on June 27, but now prices are at a similar level to where the
front-month contract was trading when the Organization of the Petroleum
Exporting Countries failed to agree on a collective output increase on June 8.
"It is too early for the IEA to release stocks for the
second time within such a short time," said Serene Lim of ANZ bank.
"In the previous release, there were some countries that were not
producing or releasing the stipulated amount."
Republican and Democratic senators sought on Sunday to craft
a plan that could avert an unprecedented default by the top oil consumer Unites
States while making modest cuts in the deficit.
But there were few signs of progress as the August 2
deadline to avoid a default drew dangerously close.
In Europe, 8 of 90 banks failed "stress tests"
performed to determine if they could withstand a long recession. Expectations
were for up to 15 banks to fall short.
But the better-than-expected results of the stress test
failed to dispel the broader gloom sweeping across markets.
Global consumer confidence fell in the second quarter to its
lowest level in a year and a half as an uncertain economic outlook, a deepening
euro zone debt crisis and rising inflation made people more cautious, a survey
But confidence was lowest in euro zone countries engulfed by
the debt crisis with Greece coming bottom of the global ranking, it said.
German Chancellor Angela Merkel called on Sunday for private
investors to make a major contribution to bailing out Greece, as pressure rose
for radical action to cut the country's debt burden.
With debt issues at the forefront, investors put the
persisting political unrest in Syria and Yemen behind them.
Syrian tanks had surrounded a town near the border with
Iraq's Sunni heartland on Sunday after thousands of people, emboldened by
defections among security forces, took to the streets there denouncing
President Bashar Al Assad.
In Yemen, forces backed by armed tribesmen launched an
offensive to retake Zinjibar, capital of southern Abyan province, officials
said on Sunday, after months of fighting with Islamist militants who seized the
Dozens have been killed and some 54,000 civilians have fled
Abyan, which has descended into daily bloodshed as the army confronts militants
the government says have ties to al Qaeda.