Oil drops below $59

Oil price drops

Oil price drops

29 June 2015 – Oil prices fell in early Asian trade, with US crude dropping below $59 after Greece imposed capital controls as lenders refused to extend the country’s bailout.
Brent crude for August delivery was down 81 cents at $62.45 a barrel early on Monday, after rising 6 cents to $63.26 a barrel on Friday.

US crude for delivery in August dropped 87 cents to $58.76 a barrel. It closed down 7 cents on Friday to end the week at $59.63.

Earlier on Monday US crude dropped as far as $58.63.

Greece took steps to forestall growing strains on its crippled financial system on Sunday, closing banks and imposing capital controls that brought the prospect of being forced out of the eurozone into plain sight. Stock and currency markets also fell in Asia.

“As far as the oil market is concerned, the potential ramifications are downward,” said Ric Spooner, chief market analyst at Sydney’s CMC Markets.

“If the situation drags out then that will be a dent to confidence for investors,” he said.

Banks in Greece will be closed and the stock market shut all week, and there will be a daily €60 limit on cash withdrawals from cash machines, which will reopen on Tuesday. Capital controls are likely to last for many months at least.

Oil investors are also monitoring negotiations on Iran’s disputed nuclear programme going on in Vienna, Spooner said.

Iran is backtracking from an interim nuclear agreement with world powers three months ago, Western officials suggested on Sunday, as US and Iranian officials said talks on a final accord would likely run past a 30 June deadline.

Securing an historic agreement would end a more than 12-year nuclear standoff between Iran and the West and open the door to suspending sanctions that have crippled the Iranian economy.

“The deadline is likely to be extended so that makes it a little less at the cutting edge of thinking right now,” Spooner said. “But we have rallied a fair way so the market is a bit vulnerable to increases in supply.”

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