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Crude oil futures fall as Spain bond yields hit euro-era highs

Oil prices fell as investors fretted about the troubled Spanish banking sector, which could trigger a Europe-wide recession.

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Gasoline prices are displayed at an Aral gas station on April 1, 2012 in Berlin, Germany. The cost of filling up should fall as oil prices decline. (Adam Berry/Getty Images)

Oil prices fell today along with global shares after Spanish bond yields shot to euro-era highs as concerns about the country’s debt-stricken banking system overshadowed a positive election result in Greece, the Associated Press reported.

Crude oil futures for July delivery fell $1.04, or 1.2 percent, to $83.01 a barrel in New York, MarketWatch reported.

Brent August crude fell $1.48 to $96.13 a barrel.

Initial relief at the Greek election result on Sunday, which saw the pro-austerity New Democracy party clinch a narrow victory, was quickly replaced with fears about the Spanish economy, the fourth largest in the euro zone, Reuters said.

More from GlobalPost: Greece: Center right New Democracy party declares victory

Madrid agreed last week to an international bailout of up to $100 billion euros ($125.8 billion) for its stricken banking sector, but investors are worried about whether that will be enough to resolve its problems.

More from GlobalPost: Moody's ratings agency downgrades Spain

A central bank report showing bad loans held by Spanish banks hit an 18-year high in April only served to fuel these concerns, the Wall Street Journal reported.

According to MarketWatch, the yield on Spain’s 10-year bond surged past seven percent to the highest level since the creation of the euro. Yields on Italian 10-year bonds were above six percent.

Higher yields reflect fears that Spain and Italy could default on their debts, which could spark a Europe-wide recession and further erode global growth.

More from GlobalPost: Crude oil futures fall 17% in May, worst monthly performance since December 2008
 

http://www.globalpost.com/dispatch/news/regions/americas/united-states/120618/crude-oil-futures-fall-spain-bond-yields-hit-eur