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Crude Erases Two Days of Gains

November 10, 2011 at 3:24 by Vladimir Vyun

Crude oil slumped, erasing previous two-day gains, as concerns that the sovereign-debt crisis will spread across the European Union hurt demand for commodities. Greece yet again was provider of bad news, while Italy still causes worries.

Yield on the Italian bonds surged to a record, dampening the optimism caused by the news about Berlusconi’s resignation. The efforts to create a interim unity government in Greece are falling apart as opposing parties are arguing about installation of a new prime minister. There rumors that German Chancellor Angela Merkel proposed to allow members of the EU to exit the shared 17-nation currency.

US crude oil inventories decreased by 1.4 million barrels to 338.1 million barrels last week. Analysts predicted an increase by 700,000 barrels. In other circumstances the unexpected drop could support oil prices, but the present unfavorable conditions imposes a pressure to the downside that is too great to be easily opposed.

Crude oil spot price was $112.26 per barrel today as of 3:15 on ICE, following yesterday’s slump from $115.35 to $112.10 per barrel.

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