Oil Falls More Than 1 Percent As Euro Tumbles After Greek Election

Oil slid more than 1 percent on Monday, with U.S. crude falling close to a six-year low, after Greek election results heightened uncertainty in the euro zone and depressed the bloc’s currency against the dollar.

Greece’s left-wing Syriza appeared on course to trounce the ruling conservatives in Sunday’s snap election, setting up a possible confrontation with international creditors.

March Brent crude fell 71 cents to $48.08 a barrel by 0718 GMT, wiping out light gains made on Friday after the death of Saudi King Abdullah, but it was off an early low of $47.85.

West Texas Intermediate (WTI) crude for March delivery was trading down 69 cents at $44.90 a barrel. Front-month WTI earlier slid to an intraday low of $44.35, just above the $44.20 hit on Jan. 13, which was the lowest since April 2009.

Global financial markets reacted to the Greek election on Monday with the euro dropping to an 11-year low against the dollar. [MKTS/GLOB]

The European currency had come under pressure on Friday after the European Central Bank said it would flood markets with over a trillion euros, more than expected, to prevent the euro zone from sliding into deflation.

“We saw the dollar rally again on Friday and this was largely on the back of ECB stimulus measures and the euro,” said Barnabas Gan, an economist at OCBC Bank in Singapore.

“Oil being a dollar-denominated commodity has been depressed by a stronger dollar.”

Brent may revisit its Jan. 13 low of $45.19 per barrel over the next four weeks, Reuters market analyst Wang Tao said.

Brent’s premium to WTI widened to more than $3 after U.S. crude stockpiles rose by the highest amount in over two decades. [EIA/S]

“Oil markets decoupled as WTI sank,” Stephen Schork, editor of the Pennsylvania-based Schork Report, said in a note. “As of Friday we have switched our daily bias to bearish in WTI.”

Money managers cut their net long U.S. crude futures and options positions in the week to Jan. 20, the U.S. Commodity Futures Trading Commission said on Friday.

In Saudi Arabia, new King Salman was quick to retain veteran oil minister Ali al-Naimi on Friday, in a message aimed at calming a jittery energy market following the death of King Abdullah.

In the United States, the East Coast from Philadelphia to New York City to Maine was bracing for a potentially historic blizzard on Monday.

Source : Reuters