Oil investment in the red

Crude oil futures fell on global commodity market cues today, prolonging their losing streak to a sixth straight day, as the overall slowdown of the economies of the West weighed on the minds of traders. News of drastic oversupplies in the US also affected oil investment.

Investing in oil has taken a severe series of hits over the past week, as the election results in France and Greece brought into question the stability of Europe’s debt recovery. Brent oil prices for settlement in June fell $1 to $112.16 per barrel on the Ice Futures Exchange in London, while West Texas Intermediate futures for delivery in June tumbled 1.25% to $96.66 per barrel in in the NYMEX electronic market, falling farther and farther away from the $100 mark.

Crude oil investment lost the bulk of its underlying index support, as the extended period of sociopolitical turmoil in the Middle East, Iran in particular, had begun to wane. While the possibility of altercations between the OPEC nation and the West and the ensuing embargos kept a lid on overproduction over the past six months, Europe’s continuous struggle to contain debt and ward off another wave of recessions finally took over market sentiment.

Nicolas Sarkozy’s ousting as French president and the subsequent election of a Socialist government cast a shadow of doubt over the possibility of a speedy economic recovery for one of Europe’s key states. That, in turn, made crude traders wary of investing in oil for the foreseeable future.

The lack or sureness surrounding Europe’s debt handling also brought down the euro against the dollar on the currency index, again removing a line of support from underneath crude oil futures.

By: Chris Termeer