SINGAPORE – Oil prices were down in Asian trade Monday as markets awaited the outcome of a eurozone finance ministers’ meeting aimed at unlocking the next tranche of aid to debt-strapped Greece.
Investors were also concerned about looming tax increases and huge spending cuts in the United States, with analysts fearing they could lead to another slowdown in the world’s biggest economy.
New York’s main contract, West Texas Intermediate (WTI) for January delivery, was down 31 cents to $87.97 a barrel in the morning, and Brent North Sea crude also for January eased 23 cents to $111.15.
“Having just enjoyed an unexpectedly strong week, global markets remain on a knife edge with uncertainty over Greece and the US taking centre stage again,” said Jason Hughes, head of premium client management at IG Markets Singapore.
Eurozone finance ministers were due to meet in Brussels on Monday for the third time in two weeks as part of efforts to decide on the next slice of aid to Greece, which is in danger of running out of money.
Greece, at the centre of a eurozone debt crisis, has been waiting since June for a loan installment of 31.2 billion euros ($40 billion), part of a 130-billion-euro financial assistance package initially granted early this year.
By the end of next month, Athens is also due to receive two more aid payments, worth 5.0 and 8.3 billion euros, on condition it implements a series of unpopular austerity measures.
Talks about the “fiscal cliff” in the United States – a combination of tax hikes and spending cuts set to take effect on January 1 barring a compromise among US lawmakers – were also keeping investors on the edge.
“Traders are likely to be bogged down by fiscal cliff talks again this week. Very little has happened in the past 10 days, partly due to the Thanksgiving break, but time is slipping away,” Hughes said.
Another slowdown in the US economy will affect crude demand as the United States is the world’s biggest oil consuming nation.