Current Oil Prices Fall

Oil prices are down due to weak demand worries and concerns of a worsening debt crisis in the eurozone after the announcement of bloc member Cyprus of its plans to charge taxes on bank deposits to increase bailout cash, said analysts.

The crude price per barrel of Brent for delivery in May moved $1.64 lower to $108.18 during midday trading in London’s ICE Futures Exchange. That rate is close to its lowest levels in three months that it reached in the past week.

On the NYMEX, the U.S. benchmark for delivery in April moved $1.11 down to $92.34 per barrel.

The finance ministers of the eurozone and the International Monetary Fund recently agreed on a bailout fund amounting to 10 billion euro – or $13 billion – for Cyprus, the eurozone’s fifth member to be saved from the debt crisis so far.

According to the deal, bank deposits over 100,000 euros will be charged with a 9.9 percent tax, while those below that maximum deposit amount will be charged 6.75 percent.

Parliament must still approve the proposal, which was moved to the coming days, for a voting session.

The prices of crude oil were declining on the rising of perceived risk after the controversial bailout deal that was recently given to Cyprus, according to Carsten Fritsch, an analyst at Commerzbank.

He said that pressure will most probably go on in the short term as more financial investors are anticipated to move out of the oil market.

President Nicos Anastasiades recently said that the contentious proposal is the island’s least painful choice, since refusing the demands of the European Union may push Cyprus to depart from the eurozone and fall into bankruptcy.

The concern is not about the government of Cyprus supporting the deal, said the DBS Research Group. It further said that the market is concerned that the wrong message may be sent on bank deposits’ safety in other nations of the European Union.

By: Chris Termeer