Oil falls as equities dip on Greek, euro zone woes

Wed May 16, 2012 5:07pm EDT
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By Gene Ramos

NEW YORK (Reuters) - Crude oil futures tumbled on Wednesday, pressured along with U.S. equities as banking troubles in Greece sparked risk aversion across markets worried about euro zone debt.

The European Central Bank confirmed a Reuters report that it has stopped providing refinancing to some Greek banks as they are severely undercapitalized. The news pressured Wall Street and oil, as the dollar surged against the euro.

The ECB move erased a morning uptick in oil prices after U.S. data showed domestic crude stockpiles rose much less than what an industry group reported late on Tuesday. <EIA/S>

Uncertainty in Greece, already shaken by the inability of politicians to form a government, pulled the euro to a four-month low against the U.S. dollar while Wall Street dropped in choppy trading. That, in turn, provoked a further sell-off in oil futures.

"The S&P 500 turned negative, deepening the weakness in the stock market on concerns about Greece and that has speeded up the pace of oil's slide today," said Mark Anderle, trader at TAC Energy in Dallas.

Also keeping oil prices lower was news that U.S. President Barack Obama was expected to seek support on Saturday from other Group of Eight leaders to tap emergency oil reserves later this summer before the European Union's July embargo of Iranian crude, the Kyodo news agency reported.

The White House declined to comment on the report.

In London, ICE Brent for June delivery expired and settled at $111.71 a barrel, down 53 cents, after volatile trading between $110.41 and $112.10. Front-month Brent fell for the fourth time in five sessions.   Continued...

Gasoline drips off a nozzle during refueling at a gas station in Altadena, California March 24, 2012. Picture taken March 24, 2012. REUTERS/Mario Anzuoni