Oil prices have slid sharply, extending a steep decline sparked by weaker than expected US jobs data, after incumbent politicians were punished by electorates in national elections in France and Greece.
WTI stands at $96.96 a barrel and June-dated Brent at $111.37, after touching $110 in early morning trading, the lowest price in four months.
Against the dollar and sterling, the Euro fell steeply too, largely erasing the benefit of the recent collapse in oil prices for Eurozone consumers.
Nicolas Sarkozy was defeated at the hands of Socialist Francois Hollande and the ruling parties in Greece’s coalition government have been left without a clear majority after taking a drubbing at the polls.
In both cases, the next government is likely to seek to alter the fiscal compact struck in March, which has seen Eurozone countries accept a fiscal straitjacket in a German-led bid to shore up the beleaguered Euro.
The news, added to weak purchasing data throughout the Eurozone, prompted a flight to safety to government bonds in Japan, with yields on British and US treasuries also set to fall in early trading as investors pull out from equities and commodities, including oil.
A consistent campaign by Saudi Arabia to stockpile crude available to key markets helped to put a lid on 2012’s consistent oil price increase. The specter of a harder-than expected landing for the Chinese industrial and manufacturing centres has also weakened appetite to support higher prices.
The Brent forward dated benchmark oil price had been buoyed to as high as $128.40 on 1 March on security fears in relation to Iran and hopes of a nascent recovery in western economies. Markets are apparently wiping oil the so-called ‘Iran premium’ and instead focusing on demand destruction and increased supplies from Iraq and Libya.
