July 18, 2011 3:35:39 PM
* Brent and U.S. light crude down around $2 a barrel
* Concerns over debt crisis in Europe, U.S. build
* IEA to look at possible further stock release
(Recasts, updates prices, market activity; new byline, changes
dateline, previously LONDON)
By David Sheppard
NEW YORK, July 18 (Reuters) - Crude oil prices fell on
Monday amid growing fears of a sovereign debt default on either
side of the Atlantic and on the possibility of another
emergency stock release from the International Energy Agency
(IEA).
Policymakers in Europe and the United States have offered
no clear solutions to their respective debt problems, forcing
investors into perceived 'safe havens' like gold, which rallied
to a record high above $1,600 an ounce.
"People are cautious about what's happening, especially in
Europe where some see the debt crisis worsening," said Joachim
Azria, analyst at Credit Suisse in New York.
"The oil market has been volatile over the past month and
with the focus on the debt problems in Europe traders are
moving into 'wait and see' mode during the summer lull."
By 11:10 EDT (1510 GMT), Brent crude futures were down
$1.55 at $115.71 a barrel, having earlier touched a low of
$114.66. U.S. crude, meanwhile, extended losses following a
weaker open on Wall Street, losing $2.04 to $95.20 a barrel.
French government spokeswoman Valerie Pecresse said she
believed the euro zone's 17 national leaders meeting on
Thursday at a summit in Brussels would agree on a rescue of
Greece, supplementing a 110 billion euro ($154 billion) bailout
launched in May last year.
But after three weeks of preparatory talks, it was unclear
whether a consensus could be reached on a way for private
owners of Greek government bonds -- banks, insurers and other
investors -- to contribute to the bailout by taking cuts in the
face value of their holdings.
In the United States, Republican and Democratic senators
sought on Sunday to craft a plan that could avert an
unprecedented default by the top oil consumer while making
modest cuts in the deficit.
But while there were few signs of concrete progress as the
Aug. 2 deadline to avoid default draws dangerously close, most
analysts still say they expect a deal to be struck in time.
"The lingering debt ceiling crisis in the U.S. is not as
serious (as in Europe), as in a worst case scenario politicians
will make only marginal cuts and run for cover, thus providing
themselves with 'the out' they need in order to raise the debt
ceiling," analysts at MF Global said in a note to clients.
EMERGENCY STOCK RELEASE II?
The International Energy Agency (IEA), the West's oil
watchdog, is expected to confer with its member countries by
July 23 to decide whether to draw further on emergency oil
stocks, a move that requires the backing of all 28 members.
Last month, member countries agreed to release 60 million
barrels, only the third such move in the IEA's history, in a
bid to calm the near 20 percent in Brent prices since the start
of the civil war in Libya.
The IEA stock release drove Brent down to $102.28 on June
27, but now prices are at a similar level to where the
front-month contract was trading when the Organization of the
Petroleum Exporting Countries (OPEC) failed to agree on a
collective output increase on June 8.
"Another release might not be imminent but they could
decide on another release by the beginning of September," said
Azria at Credit Suisse.
"The full take up of the 30 million barrels offered in the
United States could provide the incentive for a further
release."
(Additional reporting Zaida Espana in London, Seng Li Peng in
Singapore and Rebekah Kebede in Perth; Editing by David
Gregorio)For more up to-date News visit our website: http://www.myafricachannel.tv or follow us on tweeter @mactv_dc and allow MACTV to bring the "WORLD" to you!!!.
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