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Crude Falls as G-20 Rejects Europe Request, IMF Wa
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Crude Falls as G-20 Rejects Europe Request, IMF Wa 1 year, 2 months ago #42

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Crude Falls as G-20 Rejects Europe Request, IMF Warns on Economy
2012-02-27 15:09:50.976 GMT


By Moming Zhou
Feb. 27 (Bloomberg) -- Oil fell for the first time in eight days after the Group of 20 nations rebuffed calls from euro countries to increase international lending resources, adding to concern that Europe’s debt crisis will slow the economy.
Prices dropped as much as 1.4 percent after International Monetary Fund Managing Director Christine Lagarde warned the world economy is “not out of the danger zone” amid fragile financial systems and rising oil prices. The G-20 said Europe needs to review its financial firewall before any consideration can be given to boosting the IMF’s resources.
“You have the IMF warning about the world economy and the worries about Europe are starting to re-emerging,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market went a little too far on the upside and it’s now pulling back a bit.”
Oil for April delivery fell 92 cents, or 0.8 percent, to
$108.85 a barrel at 10:06 a.m. on the New York Mercantile Exchange. The contract settled at a nine-month high on Feb. 24.
Prices have increased 10 percent this year.
Brent oil for April settlement declined $1.28, or 1 percent, to $124.19 on the London-based ICE Futures Europe exchange.
Lagarde, in a statement issued in Mexico City today after a meeting of Group of 20 officials, said that G-20 countries “must now strengthen resilience to further shocks that could result from still fragile financial systems, high public and private debt, and higher world oil prices.”

G-20 Statement

The G-20 rebuffed German-led calls to help Europe fight its debt crisis, saying any decision on outside aid hinges on the euro area delivering more financial firepower within two months.
The group is “alert to the risks of higher oil prices,” the
G-20 said in a statement.
New York crude’s 14-day relative strength index for front- month contracts climbed to 76.9 on Feb. 24, the highest since April, according to data compiled by Bloomberg. A reading above
70 indicates futures have risen too quickly and further gains aren’t sustainable. Today’s 14-day RSI is about 71.
“Obviously the market has gone a little too high too fast,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “Technical indicators, the RSI for example, are pointing to a little bit overbought.”
Oil has advanced 10 percent this year amid concern that sanctions against Iran’s nuclear program will disrupt crude supplies from the second-biggest producer in the Organization of Petroleum Exporting Countries. Iran has threatened to shut the Strait of Hormuz, a transit route for a fifth of the world’s oil, in response to an embargo.

Putin Warning

Russian Prime Minister and presidential candidate Vladimir Putin warned Western leaders against a military strike on Iran.
Russia is concerned that there is a “growing threat” of action against Iran that would be “truly catastrophic,” he said in the latest of a series of articles published before Russia’s March 4 elections.
“A correction is well overdue,” said Andrey Kryuchenkov, an analyst at VTB Capital in London who predicts that prices will hold at about current levels this week. Oil’s “relentless push higher could only be explained by pure supply-side fears.”
Hedge funds and other large speculators raised wagers on rising prices by 25,273 contracts in futures and options combined in the week ended Feb. 21, or 11 percent, to 259,162, according to the Commodity Futures Trading Commission’s Commitments of Traders report. Bets increased 26 percent over two weeks, the biggest gain since March.

For Related News and Information:
Top energy, oil stories: ETOP <GO> and OTOP <GO> News on oil inventories: TNI OIL INV <GO> News on oil markets: NI OILMARKET <GO> News on OPEC: NI OPEC <GO> Global energy statistics: ENST OLD <GO> Oil markets menu: OIL <GO>

--With assistance from Grant Smith in London and Sandrine Rastello in Washington. Editors: Richard Stubbe, Charlotte Porter
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