News today that Euro zone finance ministers delayed a final decision on a further 12 billion Euro loan to help bailout Greece from default affected not only the Single Currency but also commodity prices.
Crude oil prices dropped by more than $1 just today, adding to last week’s losses, as risk aversion is growing after euro zone finance ministers announced today at the ECOFIN meeting that Greece will not receive any more aid unless they pass reforms and put in place strict austerity measures, even though they are unpopular to the Greek people.
Since last Wednesday crude oil prices dropped over $8 from $99.92 to $91.13, its lowest point just as the European trading session was opening this morning.
The Dollar index gained 0.4 percent against a basket of currencies, dragging U.S. -denominated commodities lower. This is due to the fact that the US Dollar and commodities have an inverse relationship.
“The crisis in Greece has resulted in higher risk aversion, which is weighing on oil prices,” Commerzbank analysts led by Eugen Weinberg said in a note.
“The daily movement of the euro has been an important price driver for oil for well over a year now,” analysts at PVM brokerage said. “There’s no doubt that the biggest influence on the euro and oil prices at the moment is the thinking around Eurozone countries’ sovereign debt. Contagion is the watchword.”