Oil prices crash as global economy takes another battering
Oil fell for the second day on Wednesday, as concerns rose about Europe`s ongoing debt fiesta after Spain`s Premier denied a bailout request will be as early as next weekend, and economic woes from China, the world`s second-largest oil-importer kept prices under pressure since the week start.
NYMEX WTI Crude for November delivery was down 0.21 percent at $91.42 a barrel as of 06:49 GMT, from an opening of $91.62, after recording a session high of $941.80 and low of $91.35. Brent Crude slipped 0.28 percent at $110.96, extending a four-day losing streak on Wednesday.
The global slowdown is denting oil demand in China, where manufacturing contracted for two months in a row for the first time since 2009. Fitch Ratings lowered its 2012 growth forecast for China, expected to expand 7.8 percent this year
Oil markets continue to face downside risks from the world`s leading economies. In the U.S., an inevitable fiscal cliff is looming as the Congress struggles to reach a budget deal risking a possible recession, as well as jobless rate lingering above 8 percent since more than three years.
In Europe, demand for crude has definitely slowed as investments fell with expectations the euro area economy is heading into a double-dip recession in the third quarter, as manufacturing and services shrank as a result of the debt turmoil and, high unemployment as well as austerity drive.
Uncertainty remains the main theme in Europe, and Spain, which takes the center of the three-year-old debt crisis, continue to shake market sentiment ahead of a possibly looming request for a sovereign bailout, easing the pressure on the government`s benchmark 10-year yields.
Meanwhile, markets are looking upon Spain to see whether the government will decide to tap the ECB`s new bond-buying plan, ahead of the awaited ECB monetary decision on Thursday. Recent reports showed the Spain is ready for a bailout but not as early as this weekend.
Oil traders will keep an eye close on the U.S. Energy Information Administration (EIA) will report the weekly change in U.S. commercial crude inventories, expected to increase by 1.5 million barrels in the September 28 week, from a decrease of 2.4 million barrels, a week earlier.