Brent crude oil slipped towards $123 today, reversing earlier gains as investors began a sell-off on worries about demand from slowing economies in China and Europe, though losses were capped by risks to supply from Iran.
Concerns that the euro zone may be facing its second recession in three years and that demand may be hit by China's cut in its 2012 growth target to an eight-year low of 7.5 per cent are weighing on investor sentiment.
Prices had risen earlier on fears of disruptions to supply from Iran, after Israeli prime minister Benjamin Netanyahu showed no sign of backing away from possible military action against the Opec member following a meeting with US president Barack Obama yesterday.
Front-month Brent crude pulled back seven cents to $123.73 a barrel earlier, after climbing to a daily high of $124.39. US April crude inched up 10 cents to $106.82.
"Traders seem reluctant to hold positions before this week's spate of important economics data," Ben Taylor, a sales trader with CMC Markets, said in a note today.
"Also causing concern is the Greek bondholders' acceptance of the haircut and roll-over into longer dated bonds. If a two-thirds majority acceptance does not occur it's widely believed that the Greek government could force full participation and thus trigger a default."
Greece needs to complete a bond exchange with private holders, scheduled to close on March 8th, before a second bailout is paid.
Euro zone private sector surveys showed a sharp downturn in activity at Italian and Spanish businesses dragged the currency union back into decline last month. Growth slowed in Germany, the region's biggest and strongest economy, and stalled in France.
Reuters
