Fears are spreading that the U.S., also the world's largest consumer of crude, will cut down on demand for oil as the globe's economic recovery from the recession confronts a rough patch. Political negotiations in Washington over how to increase the debt ceiling were more contentious than they should have been, one factor why Standard's & Poor reduced the U.S.' credit rating from AAA to AA+.
"The U.S. downgrade is pushing equities and oil lower, and we might see a further slump until the government announces actions to boost liquidity such as a new round of quantitative easing," analyst Eugen Weinberg of Commerzbank told Bloomberg. "The European Central Bank buying Italian and Spanish bonds will increase confidence in markets, helping them recover."
At 10:01 a.m. on Monday, crude oil futures fell 2.41 percent, a $2.64 slide to $106.73 per barrel.
But Spain and Italy no longer are within the realm of euro zone nations needing bailout aid, Michael Noonan, finance minister of Ireland, told Dow Jones Newswires. Their rough situation was eased by the European Central Bank stepping forward and purchasing those nations' debt.
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