Oil down sharply in Asian trade

illustration photo

New York's main contract, light sweet crude for delivery in October, was down $1.32 to $86.64 a barrel in afternoon trade and Brent North Sea crude for November slipped 78 cents to $111.44 a barrel.

"It's fresh economic jitters again because the market is focused once more on the sovereign debt problems in Europe," said Vandana Hari, the editorial director for Asia at energy information provider Platts.

"The EU is imposing fresh conditions on Greece to adopt new austerity measures if it is to continue getting bailout funds," she told AFP.

Last week, eurozone finance ministers meeting in Poland decided to delay until October a decision on eight billion euros ($11 billion) of bailout loans blocked until Greece persuades auditors it is on track to cut its deficit.

US Treasury Secretary Timothy Geithner, who attended the meeting, and his German counterpart Wolfgang Schaeuble also disagreed over Europe's handling of the debt crisis.

Any discord could affect attempts to mount coordinated action to deal with the crisis before it gets out of hand and batters the global financial system further, analysts said.

Hari said investors were also setting their sights on an expected announcement by US President Barack Obama on spending cuts, which could crimp demand in the world's biggest oil-consuming nation.

Obama will Monday call for new deficit cuts of $3.0 trillion, US officials said.

Weak consumer sentiment in Europe and the United States could impact Asia's export-driven economies including China, where energy demand is still strong, Hari said.

Other analysts said investors are also awaiting the results of a meeting on Tuesday and Wednesday of the US central bank's Federal Open Market Committee, which traders hope will announce fresh monetary loosening measures.