Oil turns lower in Asian trade

Oil turns lower in Asian trade

2012-06-26 09:03

Singapore - Oil prices turned lower in Asia on Tuesday after 28 Spanish banks were downgraded and Cyprus asked for a bailout, analysts said, days ahead of a closely-watched European summit.

New York's main contract, light sweet crude for delivery in August, slid 24 cents to $78.97 in the afternoon and Brent North Sea crude for August delivery dipped 21 cents to $90.80.

Eurozone fears hogged the spotlight ahead of a the summit on Thursday and Friday, with traders doubtful that anything concrete would be agreed, said Justin Harper, market strategist for IG Markets Singapore.

"With the downgrades of the Spanish banks and Cyprus... (traders were) feeling very cynical about the rhetoric," he said.

He added that the EU so far had "very little direction" on a solution to the eurozone's debt woes, and were "firefighting and trying to contain the crisis rather than trying to move forward".

European leaders attending the summit are under intense global pressure to head off a potentially catastrophic economic collapse, with particular attention on crises in Greece and Spain.

But their task came as ratings agency Moody's on Monday downgraded the credit ratings of 28 Spanish banks, saying they faced rising losses from commercial real estate loans.

The move came hours after Madrid formally requested a bailout of up to €100bn to help its banking sector.

Also Monday Cyprus, which had a large exposure to Greek government debt, requested financial help from its eurozone partners, following Ireland, Greece, Portugal and Spain.

While it did not specify the amount, local media speculated it would be in the region of five billion euros.