Brent crude dips to $106 per barrel

Oil prices edged lower in Asian trade today as concerns that debt-plagued Spain could be forced to seek a bailout roiled the markets.

Prices were under pressure after the euro plummeted, making dollar-priced oil more expensive and dampening the demand.

New York’s main contract, West Texas Intermediate crude for delivery in July, was down 41 cents to $90.35 per barrel while Brent North Sea crude for July shed 43 cents to $106.25 in morning trade.

“Spain remains the key worry for the Euro zone debt crisis, eclipsing optimism in Greece that the pro-bailout conservatives are leading the polls ahead of next month’s election,” said analysts from DBS Bank in a commentary.

“As far as the Euro zone crisis is concerned, the market does not see the light at the end of the tunnel,” it added.

The Spanish Government had yesterday announced new bonds to finance debt-struck regions. As banks scrambled to clean up bad loans, investors feared the country may be inching closer towards seeking international aid.

Across the Atlantic, analysts forecast US crude inventories to remain at the highest level for this time of the year in 22 years, indicating faltering demand in the world’s largest oil-consuming economy.

Early forecasts call for US crude stocks to drop by 400,000 barrels after rising by more than 35.4 million barrels over the past eight straight weeks, Dow Jones Newswires reported.

“As US stockpiles hit their highest level for more than 20 years, confidence is falling off a cliff,” said Mr Justin Harper, market strategist at IG Markets Singapore.

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