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People's Daily Online>>China Business

Oil price retreats on renewed Europe concerns

(Shanghai Daily)

13:20, December 06, 2011

OIL prices slipped from two-week highs yesterday on reports that Standard & Poors may downgrade credit ratings for the wealthiest nations in Europe, dealing a serious blow to hopes for saving the euro.

The Financial Times reported that S&P will put Germany, France, the Netherlands, Austria, Finland, and Luxembourg on notice that it is reviewing their credit worthiness. Each has a one-in-two chance of a downgrade in the next 90 days, the newspaper said.

S&P wouldn't comment about the report.

If the credit ratings agency follows through with downgrades, it would suggest that some of the strongest nations in the eurozone will have trouble handling massive debts run up by their more profligate neighbors.

Oil markets reacted swiftly to the news.

Benchmark crude dropped by about 2 percent, or US$2 per barrel, in afternoon trading. After rising as high as US$102.44, the benchmark price ended the day about where it began, at US$100.99 per barrel, up just 3 cents.

Brent crude, which is used to price foreign oil varieties that are imported by US refineries, fell 15 cents to finish at US$109.53 a barrel in London.

Prices had been climbing earlier in the day after French and German leaders proposed tough new measures for a eurozone treaty that would keep members from overspending. A recession may be inevitable in Europe, but analysts said the proposal for tighter spending controls, balanced budgets and other measures was an important step in saving the euro and protecting against widespread bank failures.

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