Brent crude oil prices open today’s trading session back at $112 a barrel as stock markets dipped lower on debt concerns surrounding Italy which many believe could cause the breakup of the EU itself.
Latest Brent Oil Price
In London, Brent crude oil futures for December 2011 delivery was trading at $112.05 a barrel, 07.00 GMT this morning on the ICE Futures Exchange. The contract ended Wednesday’s trading session down 2.5 percent at $112.15.
European Debt Concerns
Investors drove Italian bond rates well above 7 percent yesterday and stock markets tumbled worldwide, and although critics have warned of just such an escalation for months, European leaders again were caught without a convincing response.
City analysts believe the renewed turmoil in Europe is pointing to a deep recession which would also hit the price of crude oil as demand contracts. “It’s unavoidable that there will be an outright contraction in the fourth quarter of this year.” said Nick Parsons, head of strategy at National Australia Bank.
“We’re at the point of asking the question, if I put my money into Italy, am I going to get it back? The fact is, there isn’t a safety net.” said Simon Derrick, currency strategist at BNY Mellon.
In the immediate term, yields above 7 percent do not present a threat to Italy. The problem arises when Italy wishes to raise new debt and Italy’s next bond auction is not scheduled to take place until next week.
This auction may still go ahead but if Italy is forced to borrow at these rates for any sustained period it will then have to turn to an official bailout.
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Brent oil price back at $112 as markets dip on Italian debt concerns
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