Oil prices have fallen again. Crude oil futures for September fell $2.71 to $89.12 on the New York Mercantile Exchange, down as 9.8 percent this year. Brent oil for September has fallen $3.03 to $103.80 on the London ICE Futures Europe exchange.
Futures have fallen due to fears that Europe's debt crisis is worsening, and upon news that China's economic expansion is likely to slow further.
Phil Flynn, a senior market analyst at the Price Futures Group in Chicago, said that "worries about the European debt crisis are overshadowing everything else. The prospect of a deflationary spiral is back haunting us, especially given the signs of a Chinese slowdown. This is bad for the outlook for commodity demand, especially oil."
Catalonia, Castilla-La-Mancha, Murcia, the Canary Islands, the Balearic Islands are ajust a few of the Spanish regions that may request financial aid from the government, after Valencia sought a bailout last week.
Christopher Bellew, a senior broker at Jefferies Bache Ltd in London, explained that "the continuing saga of the euro, and in particular the travails of Spain and fears that this will soon be played out in France and Italy, is driving today's selloff."
Fears continue with Greece after the IMF announced that it will not commit more money to the struggling nation, as it is unlikely to even meet the latest bailout targets.
To cap it all, Song Guoqing, the advisor for the Chinese central bank has suggested that the country's economic growth looks to fall by 7.4% this quarter, marking the sixth consecutive quarterly decline, and the lowest expansion rate in over three years.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com More