Oil prices fall on Europe debt worry

— Oil prices fell Monday on concern that Europe’s sovereign-debt crisis is deepening and after a Chinese central bank adviser warned the country’s economic expansion may slow further.

Futures fell 4 percent as the cost of insuring Spanish debt surged to a record. Greece’s creditors will gather this week amid doubts that the nation will meet bailout targets.

Growth in China, the second-biggest crude consuming country, may cool for a seventh straight quarter, said Song Guoqing, a member of the People’s Bank of China’s monetary policy committee.

“Worries about the European debt crisis are overshadowing everything else,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The prospect of a deflationary spiral is back haunting us, especially given the signs of a Chinese slowdown. This is bad for the outlook for commodity demand, especially oil.”

Crude oil for September delivery fell $3.69 to $88.14 a barrel on the New York Mercantile Exchange. Prices are down 11 percent this year.

Brent oil for September settlement declined $3.53, or 3.3 percent, to $103.30 a barrel on the London-based ICE Futures Europe exchange.

Futures had advanced to a two-month high on July 19 on rising concern about instability in the Middle East.

Iran won’t block the Strait of Hormuz as long as it has access to the waterway, the state-run Iranian Students News Agency reported Monday, citing Ali-reza Tangsiri, deputy naval chief of the Revolutionary Guard Corps. Iran has threatened to shut the strait, a transit route for a fifth of the world’s oil, in response to sanctions aimed at halting its nuclear program.

Business, Pages 26 on 07/24/2012

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