Oil Set to Continue Sell-Off; All Eyes on FOMC, Greek Debt Woes - CNBC

Oil Set to Continue Sell-Off; All Eyes on FOMC, Greek Debt Woes - CNBC
Published: Sunday, 19 Jun 2011 | 9:28 PM ET

By: Sri Jegarajah
Reporter, CNBC Asia Pacific

http://www.cnbc.com/id/43458855

Benchmark crude oil futures will likely extend last week's sell-off as the Federal Reserve may cut its U.S. growth forecast for 2011 at its two-day policy meeting this week. Meanwhile, optimism about a second bailout package for debt-laden Greece may prove supportive though many continue to fear Athens may still default.

Crude oil futures [CLCV1 92.01 -1.00 (-1.08%) ]dropped more than 6 percent last week, the biggest weekly loss since early May, reflecting risk-off selling momentum across global financial markets as investors worried about the contagion risks from a Greek default. A continued soft patch of U.S. Economic data deepened the negative tone across commodity markets.

NYMEX crude settled at $93.01 a barrel on Friday, dropping $6.28, or 6.3 percent, for the week. That marks the biggest weekly percentage loss since prices fell a record $16.75, or 14.7 percent in the week to May 6. Meanwhile, front-month Brent settled Friday at $113.21 a barrel, falling $5.57, or 4.69 percent, over the week - the biggest weekly loss since the week to May 6, when prices tumbled $16.76 or 13.3 percent.

Selling is set to continue this week, according to CNBC's weekly poll of oil analysts, traders and strategists. Out of ten respondents, six are calling for prices to fall, three say prices will rise while one expects little change.

"The Greek debt crisis will remain the driving force and a default could have very serious implications for several members of the euro zone," said Linda Rafield, Senior Oil Analyst at Platts. "A test of $90/barrel is imminent. If $90.09 front-month NYMEX crude can't hold, then the market will probe even lower levels - there is a gap down to $87.88/b that was formed back in February by the beginning of the uprising across MENA."

For Brent, Rafield said a break of $111.21 will signal a move down to $106.00. "Neither market has breached major support lines - not yet," she added.

http://www.cnbc.com/id/43458855

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