Moody’s credit ratings review takes toll on oil investments

Crude oil futures took a tumble today, falling to their lowest levels in more than two weeks, after Moody’s Investors Service announced that they place the entirety of the European Union under debt ratings review. A drastic slowdown in China’s export growth also took a toll on global oil investments, sending them onto a downward trajectory. This marks the slowest pace at which China’s exporting industry has been advancing since 2009.

Futures for the fuel fell more than 1.7%, as Moody’s stated that last week’s EU summit failed to generate any sort of concrete plan of action regarding the region’s protracted struggle with a severe debt crisis. Oil investments took a further hit once China’s officials reported a 13.8% increase in exports, compared to the 15.9% during the previous month.

The announcement by Moody’s dashed the remainder of investor hopes that the euro zone would manage to sort out its debt crisis, simultaneously resurfacing the fears of another recession taking hold of the region. Analysts, many responsible for determining how to invest their clients’ wealth, have stated that unless both China and Europe climb out their economic slumps, global demand for crude oil will likely stay down well into 2012.

West Texas Intermediate crude oil futures for delivery in January fell $1.64 to $97.77 per barrel in electronic trading on the New York Mercantile Exchange. Futures for the American benchmark are up 7% for the year overall, yet are down 1.5% since last week.

Brent crude oil prices for January settlement dipped $1.36 to $107.26 per barrel on the ICE Futures Exchange in London. Oil investments in the European contract found some support from the ongoing Iran-U.S. disputes concerning Tehran’s nuclear program.

Moody’s credit review decision comes high on the heels of a similar warning by Standard & Poor’s, which stated last week that both Germany and France, the last strong economies of the floundering euro zone, may be stripped of their AAA credit ratings. The twenty-seven nations comprising the European Union at the moment accounted for 16% of global crude oil demand over last year.

By Chris Termeer