Crude futures drop on Greek austerity vote
Oil fell from a two-week high in New York amid speculation that U.S. crude inventories rose last week and as Greece prepared to vote on austerity measures.
Futures slid as much as 1 percent after surging 3.6 percent yesterday. Greek parliamentarians will vote later today on proposed spending cuts amid concern that Europe's debt crisis may curb demand for fuels. U.S. oil stockpiles probably increased last week for a fourth time in five weeks, an Energy Department report may show today.
"Oil's drop is reflecting some caution ahead of the Greek vote tonight," said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. "There is concern that the austerity package will not pass the parliament and Greek will default as a result."
West Texas Intermediate for December delivery fell as much as 84 cents to $87.87 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.13 at 10 a.m. London time. The contract rose $3.06 yesterday to $88.71, the highest close since Oct. 22. Prices have declined 11 percent this year.
Brent for December settlement slid 81 cents to $110.26 a barrel on the ICE Futures Europe exchange. The contract climbed 3.1 percent yesterday. The European benchmark crude was at a premium of $22.13 to New York-traded WTI, compared with $22.36 yesterday. Greek Prime Minister Antonis Samaras seeks parliamentary approval today of austerity measures to unlock bailout funds amid the third general strike in six weeks.
The 238 pages of austerity measures, ranging from raising the retirement age two years to 67 to eliminating Christmas and holiday payments for pensioners, will be debated from 10 a.m. with a roll-call vote expected after 8 p.m. Athens time. Approval of the legislation is the first of the parliamentary votes required by Nov. 12 to unlock a 31 billion-euro ($40 billion) portion of international aid.
Oil in New York is declining after reaching technical resistance along its middle Bollinger Band yesterday, according to data compiled by Bloomberg. This indicator is at $89.28 a barrel today. Futures last month reversed a rally after failing to settle above the same band, signaling sell orders may be clustered around it.
US voters returned Barack Obama as president of the world's biggest crude-consuming nation. Obama's victory reduces the likelihood that the U.S. will expand oil and gas drilling offshore and on federal land. The president threatened to veto a bill passed by the House of Representatives in July that would have almost doubled the number of oil and gas lease sales through 2015. Romney said he supported increased drilling.
The curve of German stock index DAX is pictured as news about the US elections appear on a television screen at stock market.