Oil sinks on euro zone debt worries

I / Singapore July 23, 2012, 9:49 IST

Oil fell in Asian trade today as concerns over the euro zone's debt woes pressure financial markets, including commodities, analysts said.

New York's main contract, light sweet crude for September delivery, sank $1.13 to $90.70 a barrel while Brent North Sea crude for delivery in September eased 86 cents to $105.97.

Spain's ability to handle its finances is spooking investors this time amid worries that the country, the fourth largest economy in the euro zone bloc, would need a bailout.

The country was forced to pay borrowing costs above 7.0% in a 10-year bond sale, a level considered unsustainable and that pushed Greece, Ireland and Portugal into asking for bailouts.

"The euro zone crisis has become the focus again," Singapore's DBS bank said in a commentary.

"The market's main fear is that Spain may require a full bailout some time in the future," it said.

Crude futures had soared in recent sessions, hitting two-month highs Thursday, as traders worried that rising tensions in the oil-rich Middle East will hamper supplies.