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Oil falls below $99 in Europe on concerns that EU may not grant Greece a fresh bailout
Oil fell to around $99 a barrel Monday amid continued concerns about the ability of Greece to bring its sovereign debt crisis under control.
By early afternoon in Europe, benchmark crude for March delivery was down 57 cents at $98.99 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 14 cents to finish at $99.56 on Friday.
In London, Brent crude was down 6 cents to $111.40 on the ICE Futures exchange.
Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said crude prices were volatile after Germany's finance minister warned that Europe might not give Greece a fresh bailout unless it can overhaul its state and economy. Analysts fear that could re-ignite the region's debt crisis.
European leaders were to meet Monday in Brussels to discuss austerity measures and a tentative deal reached Saturday between Greece and its private investors to avert a disastrous Greek default on its debt.
"The situation in the eurozone continues to remain gloomy without any clarification about Greek issues," said a report from Sucden Financial in London.
Supply concerns also weighed on the market although Iran has postponed plans to immediately cut the flow of crude oil to Europe in retaliation for EU sanctions over its nuclear program.
"This reduces the danger of an immediate supply shortage in the oil market, which also puts prices under pressure," said analysts at Commerzbank in Frankfurt. "Given its dependency on oil revenues, it is in any case doubtful that Iran will take this step. A new buyer would have to be found who would pay the same prices for this oil."
Still, the chance that the oil flow from Iran could be stopped sooner than planned added to the uncertainty.
"A move by Iran to cut exports to EU member states before buyers have time to line up alternatives would be a blow to countries such as Italy, Spain and Greece, which account for the bulk of crude EU imports from Iran and are struggling with stumbling economies," said a note from JBC Energy in Vienna.
The head of Iran's national oil company warned Sunday that EU sanctions could push oil prices up to between $120 and $150 a barrel. The market is also awaiting a report from an International Atomic Energy Agency team that is currently touring Tehran, Shum said.
In other energy trading, heating oil rose 1.36 cents to $3.0729 per gallon while gasoline futures were down 2.96 cents at $2.8938 per gallon. Natural gas added 5.2 cents to $2.808 per 1,000 cubic feet.
Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.