Oil prices crept lower to near $95 a barrel on Thursday in Asia amid renewed investor concern that Europe’s debt crisis could spread, undermining the continent’s economic growth and crude demand.
Benchmark crude for December delivery was down 25 cents at $95.49 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $1.06 to settle at $95.74 in New York on Wednesday.
Brent crude was down 8 cents at $112.23 a barrel on the ICE Futures Exchange in London.
Italian Prime Minister Silvio Berlusconi said on Tuesday that he would step down after Parliament passes a series of economic reforms to stave off financial ruin in Italy. But there was growing fear he doesn’t have the will or the clout to push the measures through, while some suspect he may try to stay in power.
The political uncertainty in Italy sparked a global sell-off of financial assets. The Dow Jones industrial average plunged more than 3 percent, the Euro slipped 2 percent against the dollar, and Italy’s key borrowing rate spiked to 7.4 percent.
Crude tends to fall when the dollar gains because commodities such as oil become more expensive for investors with other currencies. Investors also tend to seek safe-haven investments, such as dollars and U.S. Treasurys.
“With Greek and Italian debt problems still largely unresolved and with fears of contagion still prevalent, further Euro weakening would appear likely,” energy consultant Ritterbusch and Associates said in a report.
In other Nymex trading, heating oil was steady at $3.10 per gallon and gasoline futures fell 0.2 cent to $2.64 per gallon. Natural gas slid 0.2 cent at $3.65 per 1,000 cubic feet.