Oil prices fall on Greek rescue deal doubt
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NEW YORK, Nov 27 AFP
November 28 2012, 07:57AM
Oil prices have fallen as investor scepticism about Greece's third bailout overshadowed encouraging economic data in the United States, the world's biggest consumer of crude.
New York's main contract, West Texas Intermediate (WTI) for January delivery, on Tuesday settled at $US87.18 a barrel, down 56 US cents from Monday's close.
In London trade, Brent North Sea crude for delivery in January fell $US1.05 to $US109.87 a barrel.
"We did have some decent US data but the market is very much focused on what is happening in Europe," said Matt Smith at Summit Energy.
Crude oil futures initially rebounded in relief after the announcement early Tuesday of another hard-fought rescue deal for Greece from the European Union (EU) and the International Monetary Fund (IMF).
Fitch ratings agency said the deal "eases the immediate threat of a Greek sovereign default or eurozone exit".
But, it warned, key questions remained about how the bailout will work and that implementation risk is high.
"It seems that the bailout play has lost a little magic," said Phil Flynn at Price Futures Group.
"Perhaps because the market is not sure that the terms of this Greek bailout are actually going to work."
GFT analyst Fawad Razaqzada noted that crude futures also tracked the euro, which weakened against the US dollar after news of the Greek deal. A stronger US dollar makes crude more expensive in other currencies, tending to limit demand.
Investors remained cautious ahead of the looming "fiscal cliff" in the United States.
The fiscal cliff is a combination of large tax hikes and spending cuts set to take effect in early 2013 - that are expected to push the economy into recession - if politicians cannot compromise on an alternative deficit-cutting plan.
"The other uncertainty, the US fiscal cliff, is still in front of us," PVM oil brokers analyst Tamas Varga.