Oil declined to the lowest level in four days in New York, dropping to below $90 a barrel amid concern that Europeâ€™s debt crisis is deepening.
Futures tumbled as much as 3.7 percent as the euro dropped to an 11-year low against the yen and the cost of insuring Spanish debt surged to a record. International creditors meet in Athens tomorrow as concern grows that Greece may not meet its bailout targets. Crude also fell after a Chinese central bank adviser said the nationâ€™s economy may cool further, putting at risk demand in the worldâ€™s second-biggest crude consumer.
â€œThe continuing saga of the euro, and in particular the travails of Spain and fears that this will soon be played out in France and Italy, is driving todayâ€™s sell-off,â€ said Christopher Bellew, senior broker at Jefferies Bache Ltd. in London, who predicts further price losses may be limited.
Crude for September delivery fell as much as $3.43 to $88.40 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.12 at 12:39 p.m. London time. The contract decreased 1.2 percent to $91.83 on July 20. Prices are 10 percent lower this year.
Brent oil for September settlement on the London-based ICE Futures Europe exchange dropped as much as $3.88, or 3.6 percent, to $102.95 a barrel. The European benchmark crude was at a $14.67 premium to New York-traded West Texas Intermediate grade. The spread was $15 on July 20, the widest in four days.