Oil prices drop on global growth jitters
Futures for crude oil lost more than US$2.5 per barrel in New York and London today in response to the downgrade of the US credit rating to AA-plus with a negative outlook by Standard & Poor's, which was announced late on Friday.
The move followed prolonged negotiations between US lawmakers to raise the country's debt ceiling, which resulted in an 11th hour deal on 31 July, just a day before the deadline.
S&P said that the plan would not "stabilise the government's medium term debt dynamics" and left the door open for another downgrade if the US failed to impose sufficient budget cuts to balance its budget.
Meanwhile, the outlook for the European debt crisis remains cloudy as borrowing costs for debt ridden euro zone members keep rising despite the recent bailout deal for Greece.
The European Central Bank has decided buy Italian and Spanish bonds in an effort to curb increases in their bond yields, which, however, failed to convince investors that Europe has the situation under control.
While pushing down yields on Italian and Spanish bonds, the move did little to half the sell-off in European stock markets.
Fears of a slowdown in economic recovery in the US and the possible contagion of the debt crisis in Europe has weighed on oil stocks as slower economic growth would reduce energy consumption, leading to a decline in oil demand.
US light, sweet crude for September delivery slipped US$2.73 to US$84.15/barrel on the New York Mercantile Exchange (NYMEX) this afternoon.
September Brent crude dipped US$2.7 to US$106.49/barrel on the ICE Exchange this afternoon.
Today's top risers in the oil and gas sectors were:
Forum Energy (LON:FEP), up 11 percent at 40 pence at midday
Ascent Resources (LON:AST), up 9.5 percent at 2.9 pence
Bayfield Energy (LON:BEH), up 9 percent at 65.25 pence
Chariot Oil & Gas (LON:CHAR), up 6 percent at 127 pence
Max Petroleum (LON:MXP), up 4 percent at 11.7 pence
The top fallers were:
Woburn Energy (LON:WBN), down 32 percent at 1.53 pence at midday
Petrel Resources (LON:PET), down 23 percent at 10.29 pence
TXO (LON:TXO), down 14.5 percent at 0.514 pence
Sirius Petroleum (LON:SRSP), down 14.5 percent at 2.67 pence
Rockhopper Exploration (LON:RKH), down 14 percent at 139.5 pence
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