Oil prices slide to January lows on Italy deadlock
Brent North Sea crude for delivery in April sank to $112.61 per barrel -- the lowest point since January 28. It stood at $112.78, down $1.66 from Monday's closing level, in later London deals.
New York's main contract, West Texas Intermediate (WTI) or light sweet crude for April, slid to $91.92 a barrel -- a trough last witnessed on January 4. The contract later pulled back to $92.35, down 76 cents from Monday.
"Crude oil prices gave back recent gains and slid lower on Tuesday, following the global downside momentum as uncertainty over the Italian elections limited risk appetite and left investors concerned that Europe's third largest economy may be heading for a hung parliament," said Sucden analyst Myrto Sokou.
"Thus, the focus has switched again to the European debt concerns, with Brent oil retreating back to $113 per barrel, while WTI crude oil slides lower to retest $92 per barrel."
European equities slumped and the euro hit a near two-month dollar low on Tuesday as dealers assessed the fallout of Italy's political impasse after elections in the indebted eurozone country.
A stronger greenback also makes dollar-priced crude more expensive for buyers using cheaper currencies, denting demand.
"There's a sea of red across trading screens... as the lack of a clear winner in the Italian elections is causing panic amongst investors," said analyst Angus Campbell at trading group Capital Spreads.
"The result is a mass sell off of equities, in particular Italian and other banking stocks, the euro and pretty much any other risk asset you can think of."
A political deadlock loomed in Italy as it appeared Sunday's elections failed to produce a clear winner.
Polls show that while the leftists won the lower house, the party run by former prime minister Silvio Berlusconi had more seats in the upper house.
A majority in both chambers of parliament is required to form a government, leaving Italy in a state of limbo.
"Investors will focus their gaze on Italy's election results, which could see the eurozone's third largest economy face political deadlock in the coming months, casting doubt on further progress of economic reforms and rekindling eurozone fears," said analysts at Vienna-based oil consultancy JBC Energy.
"Meanwhile, the West and Iran will get another chance to lift the current stalemate, as talks begin in Almaty on Tehran's nuclear programme.
"While the talks are unlikely to yield concrete results, any positive news from the meeting may exert downwards pressure on oil prices."
In Almaty, world powers and key crude producer Iran have exchanged offers in crunch talks aimed at breaking a decade of deadlock over Tehran's nuclear drive.
The two-day meeting comes as sanctions bite against the Islamic republic and Israel still refuses to rule out air strikes to knock out Iran's suspected nuclear weapons push.
The first round of closed-door talks started at around 0830 GMT after an initial bilateral meeting between the Chinese and Iranian delegations.
The world powers are offering Iran permission to resume its gold and precious metals trade as well as some international banking activity which are currently under sanctions, Western officials told AFP.
But in exchange, Iran will have to limit sensitive uranium enrichment operations that the world powers fear could be used to make a nuclear bomb, the sources added.
Tehran insists its nuclear programme is solely for peaceful energy and medical uses.
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