The sovereign debt scourge's shift west prompted the price of crude oil to shift down, according to published reports.
Borrowing costs rapidly advanced in Spain, one of the five core nations at the heart of the euro debt crisis, according to Bloomberg. As a consequence of the contagion more seriously infecting a euro zone nation, crude oil prices dropped amid rapidly growing fears of a widening swath of nations falling to the contagion.
Crude oil futures lost as much as 2.5 percent of their value on Thursday morning amid the sale of the equivalent of $4.8 billion-worth of Spanish government 10-year bonds, which had a yield of 7 percent. When bonds from Ireland, Greece and Portugal touched the 7 percent threshold, those nations sought bailouts. Italy, which dropped its prime minister of 17 years earlier this month due in part to an inability to stave off the debt contagion, has been working to keep its bond yields lower than 7 percent yet the rate is hovering near that pivotal figure.
"We expect the euro zone to get into recession next year," commodities research head Eugen Weinberg with Commerzbank in Frankfurt told Bloomberg. "I don't think prices fully reflect the weakening outlook for Europe. There's still some geopolitical fears priced in with Brent at $112."
One day after gaining 3 percent in value partially because the U.S. Department of Energy said domestic inventories dropped for a second consecutive week, crude oil futures lost value, according to Reuters. But, on the year, crude oil futures are up roughly11 percent with less than 45 days remaining. Crude oil futures last year gained 15 percent.
At 12:09 p.m. on Thursday, crude oil futures were down 2.31 percent, a $2.58 drop to $109.30 per barrel.
An administrator of an Australian brokerage said the sovereign debt scourge is a backdrop that simply cannot be ignored.
"The market should oscillate around $100 for a while," managing director Jonathan Barratt with Commodity Broking Services in Sydney told Bloomberg. "Overhanging the market is the concern that this contagion in Europe will continue to flare up."
The energy commodity initially gained on Thursday following a report from the U.S. Department of Labor stating domestic jobless claims touched their lowest levels since this past April, exceeding expectations and forecasts. Another driver of oil prices earlier on Thursday was economic data indicating housing starts last month were not as low as projected. At the same time, housing permits increased.
In addition to Spain suffering from the debt scourge, Reuters reports France entered the fray. The host of the euro zone's second largest economy was confronting results of a bond auction that raised eyebrows about the scourge's ability to compromise the economy that trails only that of Germany for size in the region.
Protests of Italian nationals manifested throughout the country to demonstrate against the plan presented by new Prime Minister Mario Monti, an economist who did not appoint any politicians to his administration. Protestors demonstrated against what they termed a "bankers' government." The protests reared one day after Monti took the oath of office.
"The euro-zone crisis is already undermining global business confidence, reducing risk appetite in financial markets and strengthening the U.S. dollar, all-important negatives for commodity prices," states a research note penned by chief global economist Julian Jessop with Capital Economics, according to MarketWatch. "Even if the crisis can be contained to the region, recession in Europe would still have a significant impact on commodity demand."
On Wednesday, the energy commodity touched its top price since June but global markets suffered from an air of pessimism primarily wrought by the debt scourge.
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