Oil down in Asian trade

SINGAPORE: Oil prices fell sharply in Asian trade Monday, with investors still worried over the debt crisis in the eurozone and the weak US economy.

New York's main contract, light sweet crude for delivery in October, was down $1.18 to $86.78 a barrel in morning trade and Brent North Sea crude for November slipped 95 cents to $111.27 a barrel.

"It's fresh economic jitters again because the market is focused once more on the sovereign debt problems in Europe," said Vandana Hari, the editorial director for Asia at energy information provider Platts.

"The EU is imposing fresh conditions on Greece to adopt new austerity measures if it is to continue getting bailout funds," she told AFP.

Last week, eurozone finance ministers meeting in Poland, decided to delay until October a decision on eight billion euros ($11 billion) of bailout loans blocked until Greece persuades auditors it is on track to cut its deficit.

US Treasury Secretary Timothy Geithner, who attended the meeting, and his German counterpart Wolfgang Schaeuble also disagreed over Europe's handling of the debt crisis.

Any discord could affect attempts to mount coordinated action to deal with the crisis before it gets out of hand and batters the global financial system.

Hari said investors were also setting their sights on an expected announcement by US President Barack Obama on spending cuts, which could crimp demand in the world's biggest oil consuming nation.

President Barack Obama will Monday call for new deficit cuts of $3.0 trillion, US officials said in Washington.

Other analysts said investors are also awaiting the results of a meeting on Tuesday and Wednesday of the US central bank's Federal Open Market Committee on interest rates.

"The Fed is widely expected to discuss and announce further monetary policy measures," DBS Bank said in a market commentary.

It added however that "it is very unlikely that this discussion ends with no action being taken".

Copyright AFP (Agence France-Presse), 2011