Oil Prices Falling Low to Six-Month

5:44 AM

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Oil prices were trading in negative territory after dropping to a six-month low on financial news out of Europe and India. Texas light sweet crude oil for August delivery was falling 39 cents to $93.01 a barrel after hitting an intraday day low of $91.51 Monday. The August Brent crude contract was lower by $1.26 to $111.95 a barrel.

Over the weekend, European finance ministers delayed a decision to extend a 12 billion euro ($17 billion) loan to Greece, asking to see the introduction of more austerity measures by Athens first. This news came as the public grew increasingly dissatisifed with Greek austerity measures.

The finance ministers said decisions on moving forward with a second round of Greek emergency aid would likely take place by early July.

"The question now is how the pain is going to be shared and especially how private bondholders 'voluntarily' are going to take part in it without the rating agencies being able to call it a default," SEB Commodity Research's chief commodities analyst, Bjarne Schieldrop, wrote in a note.

On Friday, Moody's warned that it may cut Italy's credit rating on worries about the country's economic recovery as it remains vulnerable to eurozone debt contagion risks.

And in Spain on Sunday, tens of thousands of protesters took to the streets, expressing outrage over European Commission-backed austerity measures. Many continued to blame the financial crisis on bankers and politicians.

Schieldrop had a neutral view on oil Monday, noting that the negative sentiment caused by eurozone uncertainties is broad-based.

Also weighing on the markets Monday were reports that India, the fifth-largest oil importer, was trying to remove tax concessions on capital gains in the country's tax treaty with Mauritius -- an island nation that many view as a tax haven. Shares in India plummeted on the chatter.

Separately, JBC Energy analysts have raised their global oil demand growth forecast for 2011 largely due to "strong observed and expected consumption in Asia." They now see global oil demand increasing by 1.52 million barrels a day this year, which is 130,000 barrels a day higher than their May estimate.

Last week, the IEA International Energy Agency raised its 2011 global oil demand projection by 100,000 barrels. Previously, the U.S. Energy Information Administration raised its forecast by 300,000 barrels.

Integrated oil companies were trading in mixed territory. BP(BP_) was down 0.7% to $41.89; Royal Dutch Shell(RDS.A_) was up 0.2% to $68.61; Chevron (CVX_) was rising 0.6% to $99.77; Hess (HES_) was falling 1.9% to $67.94; ConocoPhillips(COP_) was rising 0.5% to $72.32; Exxon(XOM_) was ahead by 0.7% to $79.60 and Marathon Oil(MRO_) was down 0.4% to $50.39.