Stronger Dollar Drives Oil Prices Lower

WTI crude for delivery in June closes at $94.78 a barrel.

Oil prices slid Monday as the dollar strengthened against the euro on mounting worries over Greek politicians' inability to form a government.

New York's main contract West Texas Intermediate crude for delivery in June closed at $94.78 a barrel, down $1.74 from Friday. Earlier the benchmark WTI contract hit $93.63, its lowest intraday level since Dec. 19.

In London, Brent North Sea crude for June dropped 69 cents to settle at $111.57 a barrel, after earlier sinking to an almost four-month low of $110.04.

In the past two weeks, New York's WTI contract has lost about $10.

"Greece," said Tom Bentz at BNP Paribas, explaining the reason behind the weakness on the market. "They failed to come away with an agreement for a coalition government and markets are just worried that Greece could quit the eurozone."

Greece has been in a political deadlock since May 6 elections when an anti-austerity backlash stripped the parliamentary majority of parties that backed the bailout program and its debt-cutting measures.

On Monday Greek political parties again failed to form a government that would implement the painful EU-IMF debt bailout.

The heightened risks boosted the dollar, making dollar-priced oil more expensive for buyers using weaker currencies. The euro dived to $1.2830, its lowest point since Jan. 18.

Oil market sentiment also dampened by Saudi Arabia's call for crude prices to fall further.

"We need to get prices at a level around $100. Now, it is still high," Saudi oil minister Ali al-Naimi was quoted as saying on Sunday by Dow Jones Newswires.

He was referring directly to Brent crude, the most widely traded oil contract worldwide.

Speaking to reporters in Australia, the Saudi oil minister added that global crude stocks were likely to increase ahead of an anticipated seasonal rebound in demand starting from July.

"It is very important to recognize that supply today is 1.3 million to 1.5 million barrels per day over demand, which is good. It is going into inventory and bringing inventory up -- that should give comfort to consuming countries," he said.

Copyright Agence France-Presse, 2012

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