Oil prices skid on Cyprus, eurozone worries

March 22, 2013 | 15:07

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Global oil prices tumbled Thursday as Cyprus teetered toward a debt default and glum eurozone business data fueled concerns about demand for crude.

The main US contract, West Texas Intermediate (WTI) for May delivery, closed at $92.45 a barrel on the New York Mercantile Exchange, down $1.05 from Wednesday.

The European benchmark, Brent North Sea crude for May, sank $1.25 to settle at $107.47 a barrel on London's Intercontinental Exchange.

"We have a lot of pressure from Europe -- the PMI number from the eurozone... and the issue of Cyprus," said Carl Larry, president of Oil Outlooks & Opinions.

The European Central Bank warned Cyprus that if would cut off emergency funding of Cypriot banks if the authorities did not clinch a bailout deal by Monday.

The crisis in the tiny country raised concerns of contagion in an already recession-mired eurozone economy.

Market sentiment took a further hit after the Markit eurozone Purchasing Managers' Index a fell to a four-month low of 46.5 points in March from 47.9 in February.

The PMI business activity data showed that the German economy, Europe's driver, was beginning to be affected by the problems in the rest of Europe.

Prices had rallied in New York on Wednesday after the US Department of Energy reported an unexpected decline of 1.3 million barrels in US oil inventories and the Federal Reserve kept its foot on the stimulus pedal.

"We are seeing some profit taking and a small correction on the market" from the prior day's gains, said Rich Ilczyszyn of iiTrader.com.