Brent crude drops further – moving towards significant monthly loss

Brent crude has fallen 11.7% to below US$ 106 per bbl and is on track to make the biggest loss that the commodity has faced in two years. The two main factors behind this downturn are the continuing economic malaise enveloping Europe, with Spain taking the spotlight from Greece in recent weeks, and disappointing news regarding a potential Chinese economic stimulus package.

Spain is due to issue new bonds to help support its banking sector, despite interest rates reaching the symbolic figure of 7%, which drove other European countries to seek international aid.

Chinese academics have been particularly vociferous in claiming that China would be better off without an economic stimulus package. These claims have worried markets and speculators who were hoping for an economic stimulus package of the kind that China unveiled at the height of the economic crisis.

Iran offers hope

As diplomatic talks between Iran and Western diplomats continue to stall, increasingly harsh sanctions and the ongoing impact of currently enforced sanctions, are likely to result in a gradual rise in oil prices, so say some analysts.

Tehran has refused to grant UN inspectors unrestricted access to its nuclear facilities, a key precondition of the removal of the sanctions.

Edited from various sources by David Bizley

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