SINGAPORE: Oil slipped inAsia Friday on mounting concerns about the eurozone's financial woes after ratings agency Standard & Poor's downgradedSpain's sovereign debt rating, analysts said.
New York's main contract, West Texas Intermediate crude for delivery in June was down 40 cents to $104.15 per barrel while Brent North Sea crude for June shed 36 cents to $119.56 in morning trade.
"The S&P credit downgrade ofSpainis having a negative impact on the oil market, pushing prices down and weakening the euro," said Ken Hasegawa, energy desk manager at Newedge brokerage inJapan.
"The eurozone trouble is causing a lot of worry about demand," he added.
S&P on Thursday downgradedSpain's sovereign rating by two notches to BBB-plus and added a negative outlook, stating that it expected the Spanish economy to shrink both this year and next.
It also warned that the government's budget situation was worsening and that its banks would likely rely increasingly on official sources for funding as they grapple with piles of bad loans, especially in real estate.
Investors are keeping a close watch onSpain's debt situation, fearing that a Greek-style downward spiral in the country could trigger chaos in the market and ravage global energy demand.
Weak earnings data from the eurozone's leading banks also added to the bearish sentiment in the market, analysts said.
Stock prices ofGermany's largest lender Deutsch Bank as well asSpain'sSantanderrecorded heavy losses of more than three percent in late trade Thursday after reporting plunges in their first-quarter net profit.
Justin Harper, market strategist at IG Markets Singapore, said it was worrying that European banks which have been taking ECB (European Central Bank) cheap borrowing hand-outs during the eurozone crisis "don't seem to be in any better shape".
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