This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Oil Prices Fall on Weakening European Outlook

NEW YORK ( TheStreet) -- Oil prices were wavering Tuesday as concerns about Europe's ability to spur economic growth deepened.

West Texas Intermediate light sweet crude oil for January delivery was falling 36 cents to $100.63 a barrel and the January Brent crude contract was flat at $109.91. Prices were being held in check after Standard & Poor's painted a worrying picture of the eurozone heading into the European Union summit slated to kick off at the end of the week.

"S&P looks like it wants to collapse the western world's entire financial system," says WeatherBELL Analytics' energy analyst Alan Lammey.

Standard & Poor's said Tuesday that it has placed the long-term triple A credit rating of the European bailout fund, the European Financial Stability Facility, on negative outlook.

This follows the rating agency's move to place the long-term triple A ratings on the bailout fund's guarantor members, Austria, Finland, France, Germany, Luxembourg and the Netherlands on negative watch the evening before. On Monday after the markets closed, S&P placed the long-term sovereign ratings of 15 eurozone members on "creditwatch with negative implications," prompted by "our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole."

"With oil down, it's clear there is concern about the EU and demand going forward," says Kingsview Financial analyst Matt Zeman.

"Many traders have begun to wonder whether a more meaningful correction or period of consolidation may be on the horizon and whether Europe could stall global growth," says optionsXpress analyst Mike Zarembski.

Oil has risen more than $25 a barrel since bottoming out in October. WTI prices have managed to settle above $100 every day since last Wednesday.

optionsXpress recommends "going long" on crude oil contracts on a significant close above $102.59 a barrel and taking a short position in the market on a close below $95.

Oil prices shot up earlier after European Union Energy Commissioner Guenther Oettinger said there was consensus to ban Iranian oil imports.

WeatherBell's Lammey says the European Union members have to "walk a very cautious line with Iran."

"Granted Iran doesn't produce an incredible amount of world oil supply, but they can cause huge problems with regard to oil tankers in the Strait of Hormuz -- where 40% of world's oil is transported."

About half of Iran's budget revenues come from oil, revenues which many assume are used to build up the country's nuclear program.

"I think that if this does happen it will be very bullish," said PFGBest senior energy analyst Phil Flynn. "It looks like they may wait till after winter," he commented.

Other analysts noted that threats of a ban may remain just that.

"No one wants to see oil prices go through the roof as it would have grave economic consequences around the world at a time when a lot of large economies are struggling," says Lammey.

optionsXpress analyst Zarembski doubts that an EU ban would have a big financial impact on Iran any way, as long as energy-hungry Asian consumers continued buying.

Energy stocks were mostly losing ground. Hess (HES - Get Report) was falling 1.4% to $59.94; Anadarko (APC - Get Report) was down 0.6% to $81.28; Apache (APA - Get Report) was lower by 0.6% to $96.35; Triangle Petroleum (TPLM - Get Report) was falling 1.3% to $5.87; Cnooc (CEO) was behind by 1.3% to $196.30; BP (BP - Get Report) was flat at $43.55; and Chesapeake (CHK - Get Report) was up 0.3% to $25.22.

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.
Copyright 2011 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
APC $52.76 0.00%
APA $54.40 0.00%
CEO $123.43 0.00%
BP $33.58 0.00%
CHK $6.87 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs