Oil falls to near $90 as Europe’s economy falters

Oil prices fell to near $90 a barrel on Wednesday in Asia amid expectations Europe’s sputtering economy will drag on global crude demand.

Benchmark oil for July delivery was down 38 cents to $90.38 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 10 cents to settle at $90.76 in New York on Tuesday.

Brent crude for July delivery was down 31 cents at $106.37 per barrel in London.

Crude has plunged 15 per cent from four weeks ago on investor fears that political turmoil in Greece could trigger a chaotic exit of that country from the euro common currency.

Over the last week, traders have closely watched Spain’s deteriorating economy. On Tuesday, Spain said retail sales dropped 9.8 per cent in April from a year earlier while credit ratings agency Egan-Jones cut the country’s debt rating for the third time this month.

“Fears of contagion amid Greek and Spanish debt and economic issues will continue to force downward revision in global economic growth and hence world oil demand,” energy trader and consultant Ritterbusch and Associates said in a report.

Europe’s wobbly economy has also weighed on the euro, whose drop has pulled oil prices down in recent weeks. A stronger dollar makes commodities priced in dollars, such as crude, more expensive to investors with other currencies.

The euro fell to $1.2463 from $1.2487 late Tuesday in New York.