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Oil falls to below $97 in Europe as traders mull Greece debt, improving US jobs data
Oil prices fell below $97 a barrel Monday on worries that talks on a Greek debt deal needed to avoid a disastrous default are proving difficult to conclude.
By early afternoon in Europe, benchmark crude for March delivery was down $1.03 to $96.81 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.48 to settle at $97.84 on Friday.
In London, Brent crude was down 68 cents at $113.90 a barrel on the ICE Futures exchange.
Traders are concerned that Greece's political leaders may fail to agree on new austerity measures demanded by international bailout rescuers if the country is to receive more bailout loans. On Monday, Prime Minister Lucas Papademos will meet with negotiators from the eurozone and the International Monetary Fund and then with the leaders of the three parties backing his coalition to discuss the austerity measures.
"The continued undercurrent of uncertainty regarding the threat of Greek insolvency may lead to profit-taking, especially since the oil price is at the top end of the trading corridor we have seen in recent weeks," said a report from Commerzbank in Frankfurt.
Last week, investors were cheered by evidence that the U.S. economy is creating jobs at a faster pace than previously expected, boosting oil prices.
The Labor Department said Friday that companies hired 243,000 employees in January, the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent.
Analysts remain concerned that crude demand in developed countries, particularly those in Europe, will be weak this year.
"Demand continues to be concentrated in the emerging markets," J.P. Morgan said in a report. "In the United States, we see structural demand contractions in gasoline as fuel efficiency measures continue to offset gains in population growth and personal income."
Investors will be closely watching a slew of corporate earnings reports this week for clues about the strength of the U.S. and global economies. Walt Disney, Coca-Cola, and Cisco Systems are scheduled to announce fourth quarter results this week.
Escalating tensions over Iran's nuclear program, including concerns that a military attack by Israel against the Islamic Republic could be imminent, kept a floor under prices, especially Brent as Iran is a key supplier for several European countries.
"Brent seems to be more sensitive to tensions regarding the European oil embargo, Israeli-Iranian political tensions and continued protests in Egypt," said The Schork Report from U.S. analyst and trader Stephen Schork, who noted that Brent has risen over 4 percent Jan. 20 while the benchmark Nymex contract is nearly flat.
In other energy trading, heating oil was down 0.04 cent at $3.1140 per gallon and gasoline futures fell 1.41 cents to $2.9003 per gallon. Natural gas rose 3.7 cents to $2.536 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.