Oil falls despite EU deal

2011-12-12 07:49

Singapore - Oil weakened in Asian trade on Monday as investors remained cautious despite backing from EU leaders for a deal aimed at saving the eurozone, analysts said.

New York's main contract, light sweet crude for January delivery, dropped 18c to $99.23 a barrel and Brent North Sea crude for January delivery fell 16c to $108.46.

Europe's leaders on Friday backed tighter budget policing, with 26 of the 27 EU states signalling willingness to join a "new fiscal compact" to resolve the crisis threatening to crack apart the monetary union.

Britain, which does not use the euro, resisted a Franco-German drive to enshrine new budget rules in a modified EU treaty.

"At the end of the day, the summit produced a couple of rules that can seemingly be fudged without end," analysts from Singapore's DBS bank said in a commentary.

"Is this then the end to the EU debt crisis? One would like to hope it’s a start but frankly the content seems weak."

Global financial markets have been roiled in recent weeks on worries over the eurozone's escalating debt crisis, which has engulfed members including Greece, Ireland and Portugal.

The pact has led to hopes the European Central Bank will drop its reluctance to use its full arsenal against the crisis.

ECB president Mario Draghi said the summit decisions were a "very good outcome" for the eurozone.

"President Draghi had good things to say about the summit on Friday but that seemed more like cheerleading than anything else," DBS bank analysts said in the commentary."