NEW YORK (DTN) — New York Mercantile Exchange oil futures were mostly lower during overnight trade amid profit taking after Friday’s rally, with oil tracking retreating equities as the dollar rose against the euro on fresh worries over the Greek
debt crisis.
A stronger greenback is typically bearish as traders frequently use the currency to hedge against oil.
The selloff followed a deadlock in talks to restructure Greek debt.
Greece needs another bailout payment to enable it to pay $19 billion in debt in the coming weeks, but the talks between Athens and its creditors fell apart over the weekend.
German Chancellor Angela Merkel said this morning that there won’t be any more bailout money for Greece unless Athens cuts more spending. A failure to agree on a deal could spark a debt default and jeopardize the global economy, analysts said, offsetting optimism from a bullish U.S. jobs report that boosted markets on Friday.
However, tensions between Iran and the West and the disruption to oil supply from South Sudan are likely to put a floor under losses, analysts said.
This weekend, Iran reiterated a threat to halt oil exports to Europe ahead of a European Union embargo that’s scheduled to come into effect on July 1.
Reuters also reported that China will halve its crude oil imports from Iran in March from the year-ago level, as a dispute over payments and prices stretches into a third month. China, which is the main buyer of Iranian oil, has cut imports by 285,000 bpd since January, the report said.
Also, there are increasing fears that Israel could launch a strike on Iran’s nuclear facilities as early as April, which would escalate tensions.
Tehran has threatened to retaliate against any attacks.
In Africa, some 350,000 bpd of crude oil from South Sudan have been shut-in over past one week due to differences over oil transit fees with Sudan.
