Disappointing outcome of meeting between French and German leaders tanks oil prices

18-Aug-11

Crude oil prices plunged by over a dollar, after a meeting between French and German leaders failed to relieve worries about the euro zone debt crisis. Heads of State of France and Germany proposed a tax on financial transactions and closer joint governance of economic policy, but did not propose increasing the euro zone bailout fund or selling euro zone bonds. September Brent crude futures dropped to US$109.4, while the heavily traded October contract settled at US$109.1. Crude oil on the Nymex settled at US$86.6, but rebound to US$87.2 after data from the American Petroleum showed a steep drop in gasoline inventories last week. US stockpiles of gasoline fell by 5.4 million barrels in the week to Aug. 12, well above analyst expectations for an 800,000 barrel drawdown. Crude oil inventories rose by 1.7 million barrels, while stockpiles at Cushing dropped by 1.4 million barrels.