Oil extended losses in Asian trade today, with prices hitting multi-month lows as Spain’s banking woes intensified worries about the Euro zone, analysts said.

New York’s main contract, West Texas Intermediate crude for delivery in July was down 24 cents to $87.58 per barrel while Brent North Sea crude for July shed 34 cents to $103.13 in morning trade.

Prices had slumped yesterday as the dollar rose to two-year highs against the European single currency, making dollar-priced oil more expensive and hurting demand.

WTI crude had plunged $2.94 yesterday to its lowest level since October, while Brent declined $3.21, its lowest close since December 16.

“Right now, the market is wide open. There is still scope for more downside pressure on prices if the bearish sentiment about the Euro zone’s future keeps up,” said Mr Nick Trevethan, senior commodities strategist at ANZ Research.

Spain’s economic woes were sharply in focus as its 10-year borrowing rates approached the 7.0 per cent mark that has been described by analysts as a “tipping point’’.

Economists fear the Spanish Government will have to seek an international bailout — following Greece, Ireland and Portugal — despite assurances from the Prime Minister, Mr Mariano Rajoy.

The European Commission weighed in yesterday, placing the debt-wracked country at the head of a critical list of 12 economies ordered to carry out sweeping reforms this year to try to stabilise the Euro zone debt crisis.

“Concerns about a possible Greek exit and the risks of contagion from the periphery remain and in the absence of a policy response, oil prices are likely to remain under pressure,” said Barclays Capital in a commentary.

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