Greece played down reports that it was considering a solution to its debt crisis involving bigger losses for its banking creditors as a fresh round of strikes gripped the country in protest over new austerity measures.
Oil markets have been gripped by external economic factors this week, tumbling more than 4 percent on Thursday after weak Chinese industrial data and a bleak economic outlook from the US Federal Reserve sent traders into safer havens, triggering the biggest commodity sell-off since May.
Commodities were hit again on Friday, with gold slumping more than 6 percent — its biggest slide since the financial crisis in 2008 and silver dived 18 percent, the biggest daily loss since 1987.
Copper, often an indicator of economic strength, posted its sharpest decline in nearly three years.
“A weakening global economy where recession possibilities have been reinforced by a dramatic 18 percent plunge in copper prices this week continues to suggest weakening forward oil fundamentals,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
In London, ICE Brent crude for November delivery settled down $1.52 at $103.97 a barrel, the lowest close for front-month Brent since Aug. 9.
For the week, Brent crude fell $8.25, or 7.35 percent, the biggest weekly loss since the week to May 6.
US November crude fell 66 cents to settle at $79.85, also the lowest close since Aug. 9.
For the week, US crude fell $8.11, or 9.2 percent, also the heftiest loss for a week since the week to May 6.
Brent crude traded actively and its volume was up 20 percent above the 30-day average and US crude rose 11 percent above the 30-day average, according to Reuters data.
Hopes for action to preserve financial stability and beef up liquidity in money markets are focused on the annual meeting of the World Bank and the International Monetary Fund in Washington this weekend.
“Worries remain regarding the risk of Greek debt default and while the G-20 moral support to Europe to boost its
financial stability funding is better than nothing, the markets are interested in seeing action and not just words.” said Tim Evans, energy analyst at Citi Futures Perspective in New York.
Oil prices have also been affected by the prospect of a faster-than-expected restart of Libyan production that could add to supply of high-quality oil, especially to Europe where supply had been tightened by the war in Libya and outages in the North Sea and Nigeria.
Despite the slump, JP Morgan maintained its forecast of $115 a barrel for Brent for 2012, citing the prospect of supply curbs by OPEC producers to prop up prices.
“As long as producers are prepared to trim output back to mid-2010 levels, we believe that Brent is likely to remain in a $100 to $120 per barrel range, and it would likely require a recession as deep as 2009 or those seen in the early 1980s to trigger a material downgrade,” the bank said in a report.
“A recession of that magnitude would necessitate a significant price adjustment,” it added.
