Oil prices slipped today due to a fall in the outlook for oil demand, as a result of renewed political crises in Spain and Italy that may upset the eurozone’s efforts to settle its debt problems.
Brent plunged by 42 cents to $115.18 per barrel, while US crude dropped by 18 cents to $95.99 per barrel, reported Reuters.
In Spain, the opposition Socialist Party has demanded the resignation of Prime Minister Mariano Rajoy following a corruption scandal and due to results from a survey that revealed the PM’s centre-right People’s Party had the lowest support on record.
Meanwhile, in Italy the former Prime Minister Silvio Berlusconi’s chances of coming back in to power are increasing, threatening reforms implemented by the technocrat government, while concerns over Rome’s ability to fix its fiscal problems have grown.
Oil prices also came under pressure due to a firm dollar, partially boosted by a weak euro and a pressured Japanese yen.
The US Commerce Department released data that showed overall factory orders in December failed to match economists’ outlooks. Investors are now keeping an eye on the US crude inventory data to get clear indications on demand from the world’s top oil consumer.
On Monday, a Reuters poll showed that US commercial crude oil stockpiles were anticipated to rise last week due to higher imports and lower refining activity.
The American Petroleum Institute (API) is expected to release its report on Tuesday, while the US Department of Energy’s Energy Information Administration (EIA) will publish its report for the week ended 1 February on Wednesday.
Oil prices also came under pressure after Iran announced that it was open to a US offer of direct talks on its nuclear programme.
Six world powers had proposed fresh talks on nuclear negotiations in February, although Iran has not yet committed to any of the proposals.