Crude oil futures tumbled more than 4 percent on Wednesday, part of a broad commodities selloff triggered by a weakening of the euro due to the worsening eurozone debt crisis. Worries that the Organisation of Petroleum Exporting Countries lacked a mechanism to quickly trim production of individual member quotas, after agreeing on a high output ceiling, also prompted selling.
In the commodities markets, copper fell nearly 5 percent and gold tumbled to its lowest level since early October, battered by the weaker euro and as the stronger dollar nudged investors to trim a broad range of assets, including equities. US crude oil inventories fell last week, government data showed, but the data was "basically in line with consensus estimates and will do little to change the bearish tone set by developments out of Europe," said Chris Jarvis, president of Caprock Risk Management in Rye, New Hampshire.
In London, ICE Brent crude for January delivery fell $3.82 at $105.68 a barrel by 11:50 am EST (1650 GMT), having slid to a session low of $105.54 earlier, down $3.96, or 3.62 percent, the biggest one-day percentage loss for Brent crude since October 17. NYMEX January crude slid $4.38 to $95.76. It earlier skidded to a session low of $95.39, down $4.75 or 4.7 percent, US crude's biggest one-day percentage loss since September 22.
US crude futures fell sharply on Wednesday as revived concerns about Europe's economy and the ability of European leaders to tackle the region's debt woes pressured the euro, equities and oil prices. Oil's slide followed a 2 percent jump the previous session that was attributed to intensified worry about supply disruptions that might result from the growing tensions between Iran and the West over Tehran's nuclear program.
The euro slid to an 11-month low against the dollar on Wednesday, as investors speculated that more eurozone countries may have investor ratings downgraded in the near term as a quick remedy to the region's debt crisis remains elusive. Pressure mounted for the European Central Bank to intervene more decisively after financial markets judged that yet another EU summit had failed to resolve the eurozone's debt crisis. But Germany's powerful central bank chief made clear his opposition to ramping up the ECB's purchases of eurozone government bonds.
Oil's slip comes after the US Federal Reserve stood pat on Tuesday, producing no additional monetary easing measures and warning that Europe's problems could endanger US economic growth. Oil investors awaited government oil inventory data after Tuesday's report from industry group American Petroleum Institute showed US crude oil stocks rose 462,000 barrels last week against expectations stocks would be down. Gasoline stocks dipped 12,000 barrels, while distillate stocks rose 1.2 million barrels, the API said.