SINGAPORE: Brent crude futures fell by more than a dollar to one-month lows below $114 a barrel on Tuesday, hit by worries over demand growth as a potential political vacuum in Italy revived fears over instability in the debt-plagued euro zone.
The uncertainty in Rome, along with soft manufacturing data from China and concerns the United States may rein in its economic stimulus, are clouding the global economic outlook and could erode oil's modest price gains so far this year. Investors exited riskier assets because of the uncertainty, pushing down Asian shares and base metals along with oil, while gold rose.
Brent crude hit a session low of $113.30 a barrel, its weakest since Jan. 29, and was down 61 cents at $113.83 by 0403 GMT. US oil slipped 54 cents to $92.57, after touching a low of $91.92 earlier, a level not seen since Jan. 4.
"Market sentiment has certainly turned bearish. Uncertainty in Italy is on top of everyone's mind, plus we had weak China numbers," said Victor Shum, an oil analyst at IHS Purvin & Gertz. "So we are seeing selling in oil. Directionally it is correct because the market was overbought."
Italy's election results confirmed market fears that the polls would not produce a government strong enough to carry out effective reforms, reviving memories still fresh of the financial crisis that took the 17-member currency block to the brink of collapse in 2011.
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