 "Oil slips to seven-week low on eurozone crisis, recession fears")
Oil fell to seven-week lows, around 2 percent down, on Monday as the euro zone crisis deepened fears of wider financial contagion and recession, encouraging investors to dump commodities and stocks in favour of safer assets.
Gold and copper both tumbled more than 5 percent and silver lost more than 16 percent at one point, while US Treasuries rose.
World stocks fell towards 14-month lows and the euro hit a 10-year low against the yen as doubts grew over how effective Europe would be in containing the continent’s sovereign debt problems.
“These are very critical days and weeks ahead, reminiscent very much of the touch-and-go situation we were in back in 2008,” Edward Meir, senior commodities analyst at brokers MF Global said. “The key difference this time around is that it is countries and not companies that are in danger of going bust.”
[caption id=“attachment_92607” align=“alignleft” width=“380” caption=“US crude lost $2.74 to reach a low of $77.11 per barrel, after rising more than a dollar earlier. Reuters”]
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Brent futures for November fell $2.31 to a low of $101.66 a barrel, the lowest intra-day level for the front-month contract since 9 August. The contract recovering some ground to trade around $102.90 by 0812 GMT. Brent plunged 7.35 percent last week in its biggest loss since May 6. So far in September, Brent has fallen more than 10 percent.
US crude lost $2.74 to reach a low of $77.11 per barrel, after rising more than a dollar earlier. It had recovered to trade around $78.70 by 0812 GMT, still down $1.15.
Reports European leaders were seeking new ways to solve the region’s debt problems lifted commodities in early trade, but the market reversed sharply on concerns policymakers were doing too little to stem the crisis.
“In the absence of formal measures to deal with the debt problem, the general statements coming out of the euro zone are unlikely to reassure the markets,” said Ric Spooner, chief market analyst with CMC Markets in Sydney. “Until we get something more concrete, commodities will come under pressure as the risk of recession increases.”
Reuters