Crude drops in Asia on Cyprus bailout
HONG KONG -- Crude-oil futures tumbled in Asian trade Monday tracking a sharp decline in the euro and wider markets, as sentiment soured after the proposed bailout deal for Cyprus.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $92.35/bbl at 0652 GMT, down $1.10 in the Globex electronic session. May Brent crude on London's ICE Futures exchange fell $1.27 to $108.55/bbl.
Euro-zone leaders and the International Monetary Fund have agreed to a $13 billion bailout for Cyprus in exchange for a levy on bank deposits.
A pending parliamentary vote in Cyprus regarding the levy will be the key event to watch at the start of the week, as it could have repercussions on the whole banking sector, Singapore's OCBC Bank said in a note, adding that "risk sentiment could thus remain tentative for now."
Oil prices were dragged lower as the euro weakened and the dollar surged. A strong greenback weighs on dollar-denominated crude oil prices as it becomes more expensive for investors holding other currencies.
Crude is also weighed down by healthy supply levels.
Oil production in Saudi Arabia, the world's largest exporter of crude, rose to 9.050 MMbopd in January, compared with 9.025 MMbopd a month earlier, official data showed Sunday.
The kingdom exported 7.091 MMbopd and condensate in January, up from 7.062 MMbopd in December, according to the Joint Organization Data Initiative.
The ICE Brent contract has been flirting with key technical support for the last two weeks and the bulls either have to put in a robust defense now or risk further weakness below the $105/bbl threshold, consulting firm The Schork Group said in a note.
Additionally, the supply of crude oil in the North Sea is improving with Forties crude output from the Buzzard fields and natural gas and condensate from the Elgin-Franklin fields resuming, Schork said.
Seasonally weak crude demand amid planned refinery maintenance and winter heating demand winding down are currently bearish for crude oil.
Nymex reformulated gasoline blendstock for April--the benchmark gasoline contract--fell 466 points to $3.1172 a gallon, while April heating oil traded at $2.9089, 301 points lower.
Dow Jones Newswires