-- Optimism fades about bailout of Spanish banks, depressing markets
-- OPEC not expected to make any major changes to production quotas
-- Weak prices on the physical market are pressuring Brent prices
-- Attention turns to Thursday's OPEC meeting in Vienna, weekend
elections in Greece
LONDON--Crude oil futures traded lower Tuesday, continuing Monday's
downturn as investor optimism faded over the planned bailout of
Spanish banks.
At 1058 GMT, the July Brent contract on London's ICE futures exchange
was down 49 cents, or 0.5%, at $97.52 per barrel. The July contract on
the New York Mercantile Exchange was trading down 24 cents, or 0.3%,
at $82.47 per barrel.
"The flat price corrected pretty significantly yesterday so this is a
continuation of that," said Olivier Jakob, managing director of
Swiss-consultancy Petromatrix.
On top of fears over how struggling economies in Spain and Greece will
affect the rest of the euro zone, the supply and demand picture on the
physical oil market is also weak, Jakob said. Light, sweet crude oil
grades from the Atlantic Basin are under pressure, as are grades of
crude coming from the Mediterranean, like CPC. These lower
prices--triggered by a comfortable supply--are starting to spill over
into Brent crude oil prices, Jakob said.
Aside from focusing on the outlook for the euro zone, market
participants are looking to an upcoming Organization of the Petroleum
Exporting Countries meeting in Vienna for cues on changes to oil
supply.
Ahead of Thursday's meeting, Saudi Oil Minister Ali al-Naimi implied
that he favored a higher production ceiling for OPEC, but said he
wouldn't ask the organization to increase its production levels at
this week's meeting.
Analysts say they don't expect OPEC to make any major changes to their
production quotas, as already it is pumping oil at levels not seen
since 2008.
Later this week, oil market participants will look to the
International Energy Agency's monthly report, Energy Information
Administration weekly oil stocks data due Wednesday. Elections in
Greek will take place over the weekend.
At 1100 GMT, the ICE's gasoil contract for June delivery was trading
$5.00 higher at $856.25 per metric ton, while Nymex gasoline for July
delivery was down 63 points at $2.6503 per gallon.
-Write to Jenny Gross at jenny.gross@dowjones.com
(END) Dow Jones Newswires
June 12, 2012 03:35 ET (07:35 GMT)
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