NEW YORK: Oil prices finished mixed on Tuesday as investors faced growing uncertainty over the Greek debt crisis and China’s efforts to stem a stocks rout in the world’s top energy consumer.
West Texas Intermediate (WTI) for August, the US benchmark, dipped 20 cents to $52.33 a barrel on the New York Mercantile Exchange, its lowest level since mid-April.
Global benchmark Brent North Sea crude for August delivery a barrel closed at $56.85 a barrel in London, a gain of 31 cents from the prior day’s settlement.
On Monday WTI plunged nearly eight percent and Brent dropped 6.3 percent as the clouded economic outlook raised the specter of a further slowdown in global demand for crude.
Investors are worrying about weaker demand for crude oil as a result of Greece’s mounting debt crisis, which could result in the country leaving the eurozone, and the fall in Chinese stocks market despite government efforts to end three weeks of plunging prices, analysts said.
On Tuesday, Greece unexpectedly showed up without a new set of reform proposals at a eurozone finance ministers emergency meeting, after a referendum on Sunday rejected European proposals.
Chinese shares took another tumble Tuesday, defying government efforts to arrest a precipitous fall that has wiped an estimated $3.2 trillion off markets and threatens the world’s number-two economy.
“Oil demand from China could decline further if the current stock market rout spreads to the rest of the economy, while a Greek (eurozone) exit could affect demand for oil from Europe,” said analyst Jasper Lawler at CMC Markets.
The dollar firmed as investors sought a safe haven from the uncertainties, putting more pressure on the dollar-priced oil market.
Meanwhile, the top-level negotiations in Vienna between six major powers and Iran on Tehran’s nuclear ambitions on Tuesday were effectively extended until Friday. An agreement could allow Iran to boost oil exports, piling more downward pressure on prices.
“The ongoing sense that Iranian nuclear negotiators are making enough progress to extend talks also adds a risk that with the eventual lifting of sanctions, Iranian, OPEC, and world crude oil supplies will rise,” said Tim Evans of Citi Futures.