Crude oil investment down as France elects new government

Crude oil prices took another sharp fall on the charts today, tumbling to their lowest marks of 2012, as European elections overtook sector sentiment. New governments in France and Greece caused traders to worry as to whether the economic recovery in the euro zone would stumble, bringing oil investment down as consequence.

West Texas Intermediate, the recognized benchmark of the US, lost a staggering $1.10 to settle at $97.39 per barrel in the NYMEX marketplace. Investments in the contract sank shortly after the French election results reached the sector, with the commodity falling below $96 per barrel, before minor financial speculations caused a mild recovery for crude.

Brent futures for June delivery lost 48 cents and settled at $112.70 per barrel in London.

Both France and Greece rejected old leaders who were supportive of the severe austerity measures still at play in the bulk of the euro zone. France’s new government especially would likely refuse to be as cooperative as Sarkozy’s office, while Greece is still displaying struggles of coming up with an adept coalition state.

Traders and economists alike speculated that France’s Socialist government could potentially derail Europe’s march towards recovery, with many rethinking their investment strategies in high risk commodities such as precious metals, base metals and crude oil.

Representatives from the US and China also voiced their concerns over Europe’s potential return into a recession, as the region utilizes much of the exporting goods out of the two nations.

Disappointing financial reports out of China and the US also affected crude oil futures and oil investment, as inventories in Cushing, Oklahoma, the main American oil storage hub, have now reached their highest numbers in more than twenty years.

By: Chris Termeer