As the euro continued to weaken due to the worsening euro zone debt crisis, it has triggered a broad commodities selloff. As a result, crude oil futures plummeted by over 5% in biggest drop seen in nearly three months. Italy sold 3 billion euros of five-year government bonds today at a yield of 6.47%, up from 6.29%. As a result, the euro broke 11-month lows versus the dollar below $US1.30. Another factor that drove the sell off is concerns that OPEC lacked a mechanism to quickly trim production of individual member quotas. OPEC agreed on a new supply target of 30 mln bpd, roughly in line with current production. However, there was no mechanism in place to cut quotas should already-fragile demand grow less quickly than expected.
In London, ICE Brent crude for January delivery settled at US$105, falling by almost 5 dollars, and Nymex January crude settled just a tad above US$95.
Oil on the Nymex rose to near US$96 a barrel in Asia after plunging the previous session.