Oil prices fall on Europe debt worries

29 April 2010

Europe’s Brent contract falls week-on-week following Greece and Portugal downgrades

Oil prices fell in Europe during the week ended 29 April as fears over Greece’s debt crisis weakened the euro and raised concerns over the economy of the European Union (EU).

Europe’s benchmark June Brent contract was trading at $85.53 a barrel, down from $86.75 a week before (MEED 22:4:10).

The US’ benchmark June West Texas Intermediate (WTI) contract was largely unchanged at $84.19 a barrel on 29 April, compared to $84.10 seven days earlier.

Both contracts were trading higher than on 27 April, when WTI fell below $83 a barrel. The fall came after the US rating agency Standard & Poor’s downgraded the debt of EU members Greece and Portugal, which pushed down the value of the euro, and diminished economic confidence in the region.

The higher prices seen on 29 April were largely due to the US’ Federal Reserve’s announcement that it would keep interest rates at 0 to 0.25 per cent in the world’s biggest economy for the foreseeable future.

A report by the US’ Energy Information Administration on 28 April also helped to lift prices. It said that the use of the country’s refineries, which break down crude oil into more valuable gasoline products – was at an 18-month high of 88.85 per cent, suggesting that demand for gasoline products is increasing alongside the profitability of oil.

The average price of the 12 Opec member states’ crude oils was $82.13 a barrel on 29 April, down from an 18-month high of $83.91 on 26 April.

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