Oil falls on debt worries

09:18, July 19, 2011      

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Crude prices fell on Monday as worries about European and U.S. debt lingered.

Crude investors stayed depressed amid the unsolved European and U.S. debt problems. In Europe, the results of banks stress test, released last Friday, failed to ease concerns on the markets, the bond yield of debt-burdened countries like Italy and Portugal kept rising. To this, there seemed to be no silver bullets left for the policymakers.

In the United States, worries about a possible debt default increased as the debt ceiling debate came to no agreement. Ratings Agency Standard &Poor's warned that even though an agreement was reached a short-term debt default could be inevitable.

Risk aversion forced investors to escape from crude and rush into "safe haven" gold, pushing the precious metal to an ever record high of over 1,600 dollars an ounce.

The International Energy Agency was expected to release more strategic oil reserve after the 60-million barrels release last month proved to be a failure in tackling the high oil prices. But analysts said Germany and Italy might say no to new release.

Light, sweet crude for August delivery fell 1.31 dollars, or 1. 35 percent to settle at 95.93 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for September delivery slipped 1.21 dollars, or 1.03 percent to close at 116.05 dollars a barrel.

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