Oil extended losses towards $33 a barrel yesterday, after Russia and Ukraine agreed on a gas deal that would help secure supplies to Europe, while no improvement was in sight for oil demand.
Russia and Ukraine are both ready to fully resume transit of Russian gas to Europe, Interfax quoted Russia Gazprom's Chief Executive Alexei Miller as telling President Dmitry Medvedev yesterday. Economic gloom deepened after the Royal Bank of Scotland posted the biggest loss in the UK's corporate history, with stock markets in Asia following European counterparts lower.
The dollar rose to a six-week high against the euro on the news, making US -denominated commodities less attractive to investors. US light crude for February delivery fell to $33.35 a barrel by 0815 GMT, down $3.16 from Friday's settlement after having slid as low as $33.30. There was no official settlement on Monday due to the holiday.
The March contract, which takes over as front-month on Wednesday, was down $2.97 to $39.60, and more than $6.00 a barrel above the February contract due to brimming crude stocks at Cushing, Oklahoma, the delivery point for NYMEX contracts. London Brent crude fell $1.08 to $43.42 a barrel, having closed $2.07 lower on Monday.