Oil falls below $96 amid debt worries

Oil prices fell below $96 (Dh352) a barrel yesterday as Europe's debt crisis undermined confidence the continent will avoid recession next year. By early afternoon in Europe, benchmark crude for January delivery was down 74 cents at $95.43 a barrel in electronic trading on the New York Mercantile Exchange. The contract last settled on Wednesday in New York at $96.17, down $1.84. Markets in the US were closed Thursday for the Thanksgiving holiday. In London, Brent crude for January delivery fell $1.27 cents to $106.51 a barrel on the ICE Futures exchange. Investor concern that fiscal austerity measures to lower Europe's debt levels will hurt global economic growth and oil demand has helped pull crude back from above $103 last week. Credit ratings agency Fitch downgraded Portugal's long-term debt rating to BB" from BBB-, following a similar move recently by Moody's, which also downgraded Hungary's bonds to junk status. Uncertainty about contagion spreading from Greece to Portugal, Italy, Spain and Ireland has begun to undermine confidence in Germany and France. The yield on Germany's 10-year bond rose above the 10-year UK government bond for the first time since 2009. "The Eurozone sovereign crisis is starting to threaten the bond markets of even the most solid European economy — Germany," Barclays Capital said in a report. Rising stockpiles of crude oil and refined products in the US and Europe also weighed on prices. "The return of Libyan, Nigerian and North Sea volumes and slower demand growth have all created a mesh of bearish sentiment around the oil market," Barclays said, "...creating a sense of plentiful supplies."