Oil sharply lower in Asia on eurozone worries

SINGAPORE – Oil prices fell in Asian trade Wednesday as investors fretted over political uncertainty in the eurozone, while concerns over softer US energy demand also weighed, analysts said.

While Unioil Petroleum effected price rollbacks on Sunday, the other oil firms are cutting prices of petroleum products effective Monday, May 14, 2012. AP PHOTO/RICK BOWMER

New York’s main contract, West Texas Intermediate crude for delivery in June was down $1.03 to $92.95 per barrel while Brent North Sea crude for June shed 87 cents to $111.37 in morning trade.

“Oil prices remained under pressure as euro area politics continued to be in focus,” Barclays Bank said in a commentary.

“Speculation that Greece may exit the single currency caused European stocks, peripheral euro area bonds, the euro and commodities to sell off,” it added.

Greece’s political stalemate remains at the centre of investors’ attention, overshadowing better-than expected eurozone economic growth data on Tuesday.

The debt-stricken country is poised to hold fresh elections on June 17 after last-ditch talks on forming a new government broke up without agreement.

The new polls follow an inconclusive election on May 6 when a majority of Greeks voted against harsh austerity measures Athens took on in return for a massive EU-IMF bailout late last year.

With no guarantee that the fresh vote will produce a viable government, the prospects are for continued volatility and uncertainty over the country’s future in the 17-nation Eurozone.

Top eurozone leaders have so far offered mixed signals on their resolve to keep Greece in the bloc.

Germany’s Angela Merkel and France’s Francois Hollande offered support on Tuesday, while International Monetary Fund chief Christine Lagarde raised the possibility that the country could leave the eurozone in an orderly fashion.

Meanwhile, oil was also under pressure following a report by industry group American Petroleum Institute that US crude stockpiles could have risen by 6.6 million barrels in the week to May 11.

A jump crude inventories signals faltering demand in the world’s largest economy.

The official weekly inventory report by the US Energy Information Administration will be released later Wednesday.