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Oil slides on deepening fears over eurozone

business Updated: May 18, 2012 10:47 IST

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Oil extended losses in Asian trade today on growing concerns that the eurozone's debt woes could worsen, causing a global crisis that would ravage energy demand, analysts said.

New York's main contract, West Texas Intermediate (WTI) crude for delivery in June, was down eight cents to $92.48 per barrel while Brent North Sea crude for July shed 53 cents to $106.96 in morning trade.

WTI crude had closed at $92.56 a barrel in New York trade yesterday, the lowest level since November 1, while Brent slid $2.26, the lowest point since December 30.

"A weakening of sentiment has brought oil prices down sharply... with sovereign debt fears a key element in a mounting loss of faith in economic, and hence demand, prospects," said Barclays Bank in a commentary.

"The current bout of concerns have arisen from the resurgent fears about the Spanish and Italian banking systems and speculation that Greece may have to exit the euro," it added.

In Greece, a caretaker technocrat government took office on Thursday to organise the debt-plagued nation's second elections in just six weeks after an inconclusive May 6 vote.

The polls left Greece in limbo, pushing the financial markets and euro down sharply, and the new election on June 17 offers no guarantee of a viable government able to implement an EU-IMF bailout that has divided the country.

Markets were also pressured by official data that showed Spain -- another eurozone economy crippled by debts --sank into recession with a 0.3-per cent contraction in the first quarter of 2012.