The rapidly dropping value of the embattled common currency of the European Union helped pull down crude oil futures on Wednesday, according to Reuters.
The commodities complex was enduring a wide-ranging selloff that was prompted by the sovereign debt crisis' drive toward profound depths – less than one week after the two-day European Union summit in Brussels was supposed to see the creation of a soothing salve that would make the scourge go away.
Also weighing on crude oil prices were concerns about nations of the Organization of Petroleum Exporting Countries being ill-equipped to swiftly intervene to cut down on the production quotas for particular member nations. OPEC came to an accord regarding the placement of a limit on production; that also drove a solid amount of selling.
U.S. government data indicated inventories of the energy commodity dropped earlier this month, but one risk manager told Reuters that will prove to have minimal influence on an already lackluster performing commodity due to the sovereign debt crisis thrashing about relentlessly.
That economic data was "basically in line with consensus estimates and will do little to change the bearish tone set by developments out of Europe," president Chris Jarvis with Caprock Risk Management in New Hampshire told the news service.
At one point during morning trading in London, the energy commodity plunged 3.62 percent, representing the largest loss in one day since October 17.
But that was short of Wednesday afternoon figures.
At 2:16 p.m. on Wednesday, crude oil futures dropped 4.53 percent, a $4.96 loss to $104.54 per barrel.
The movement by OPEC to establish a ceiling for production pushed production to a maximum that drew OPEC's target closer to present maximums for production, according to Bloomberg.
Just one day earlier, crude oil futures increased 2.4 percent, representing the top climb in nearly one month.
Rafael Ramirez, energy minister of OPEC member nation Venezuela, said OPEC reached agreement on a maximum production of 30 million barrels per day. Ramirez spoke at the OPEC meeting in Vienna on Wednesday.
After supplies of crude oil gained last week, the consumption of gasoline fell, according to the American Petroleum Institute, which is funded by the industry.
While the energy commodity's bearishness resumed, equities also dropped. The shared currency of the European Union touched its lowest level as compared with the U.S. dollar since January.
One commodity strategist opined on OPEC's action, the prospects for early 2012 and the energy commodity's strong performance on Tuesday.
"The production cap seems quite neutral, since demand is likely to be held back by weaker growth in the first half of next year," commodity strategist Filip Petersson with SEB in Stockholm told Bloomberg on Wednesday. "Bullishness from yesterday is dissipating."
Oil & Gas Journal reports Tuesday's climb was partially prompted by incorrect rumors about Iran shutting the Strait of Hormuz. The passageway serves as a vital conduit for the passage of crude oil from Saudi Arabia.
That combined with conjectures about the U.S. Federal Reserve preparing a third round of quantitative easing also proved to be pivotal for the price of the energy commodity, according to an official with an outfit based in Switzerland.
""It was suggested that there was a rumor that the Federal Reserve would announce QE3 or that there was a rumor that Iran was closing the Strait of Hormuz," Olivier Jakob with Petromatrix told Oil & Gas Journal.
But he did warn about relying too heavily on rumor, also noting that the U.S. Navy indicating no trouble in the strait did not prompt any correction to the price of oil.
Such was also the case when the U.S. Federal Reserve noted no additional round of quantitative easing would ensue.
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