Oil prices fall further as Spain worries intensify

In this Tuesday, March 22, 2012, file photo, a pump jack is silhouetted against the setting sun in Oklahoma City. Oil extended losses in Asian trade Thursday, May 31, 2012. New York's main contract, West Texas Intermediate crude for delivery in July, was down nine cents to $87.73 per barrel while Brent North Sea crude for July shed 29 cents to $103.18 in the afternoon. AP PHOTO/SUE OGROCKI

SINGAPORE—Oil extended losses in Asian trade Thursday, with prices hitting multi-month lows as Spain’s banking woes intensified worries about the eurozone, analysts said.

New York’s main contract, West Texas Intermediate crude for delivery in July, was down nine cents to $87.73 per barrel while Brent North Sea crude for July shed 29 cents to $103.18 in the afternoon.

Prices had slumped Wednesday as the dollar rose to two-year highs against the European single currency, making dollar-priced oil more expensive and hurting demand.

WTI crude had plunged $2.94 on Wednesday to its lowest level since October, while Brent declined $3.21, its lowest close since December 16.

“Right now, the market is wide open. There is still scope for more downside pressure on prices if the bearish sentiment about the eurozone’s future keeps up,” said Nick Trevethan, senior commodities strategist at ANZ Research.

Spain’s economic woes were sharply in focus as its 10-year borrowing rates approached the 7 percent mark considered too high for governments to be able to service their debts.

Economists fear Madrid will have to seek an international bailout – following Greece, Ireland and Portugal – despite assurances from Prime Minister Mariano Rajoy.

The European Commission weighed in on Wednesday, placing the debt-wracked country at the head of a critical list of 12 economies ordered to carry out sweeping reforms this year to try to stabilize the eurozone debt crisis.

“Concerns about a possible Greek exit and the risks of contagion from the periphery remain and in the absence of a policy response, oil prices are likely to remain under pressure,” said Barclays Capital in a commentary.