Crude oil fell after the euro weakened against the dollar on concern the region?s debt crisis will spread, curbing the appeal of commodities as an investment.
Oil slipped as much as 0.9 percent after the common currency dropped against all except three of its 16 major peers. U.S. equities erased early gains as technology shares wiped out an early rally and Boeing Co. tumbled on concern it may delay its 787 Dreamliner again.
?The weakness of the euro is putting some pressure on the oil market,? said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. ?There was no headline in particular that sent us lower.?
Crude oil for January delivery declined 54 cents, or 0.6 percent, to $87.48 a barrel at 11:14 a.m. on the New York Mercantile Exchange. January futures expire today. The more active February contract fell 58 cents, or 0.7 percent, to $88.02 a barrel.
Brent crude oil for February settlement dropped 36 cents, or 0.4 percent, to $91.31 a barrel on the London-based ICE Futures Europe exchange.
France risks losing its top AAA grade as Europe?s debt crisis prompts a wave of downgrades that threatens to engulf the region?s highest-rated borrowers, with Belgium also facing a possible cut.
Moody?s Investors Service said Dec. 15 it may lower Spain?s rating, citing ?substantial funding requirements,? and slashed Ireland?s rating by five levels on Dec. 17. Standard & Poor?s is reviewing its assessments of Ireland, Portugal and Greece.
The euro declined 0.6 percent against the dollar to $1.3115 at 11:15 a.m., down from $1.3188 on Dec. 17.
?Well Balanced?
The oil market is ?well balanced,? and current prices are at a ?good? level, Algerian Minister of Energy and Mines Youcef Yousfi said in an interview. Algeria, an OPEC member, produced 1.25 million barrels of crude a day in November, according to data compiled by Bloomberg.
The Organization of Petroleum Exporting Countries, which accounts for 40 percent of global supply, maintained output quotas of 24.845 million barrels a day for 11 of its members at a meeting in Quito, Ecuador, on Dec. 11.
Oil prices may rise next year on heightened demand that has eroded excess global crude inventories, according to the Centre for Global Energy Studies. Prices will be strongly influenced by OPEC?S response to rising demand, CGES said. The center forecasts oil demand will increase 1.6 percent in 2011, compared with a 3 percent gain this year.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
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