Oil prices lower on eurozone debt concerns

SINGAPORE: Oil slipped in Asia Friday on mounting concerns about the eurozone's financial woes after ratings agency Standard & Poor's downgraded Spain's sovereign debt rating, analysts said.

New York's main contract, West Texas Intermediate crude for delivery in June was down 40 cents to $104.15 per barrel while Brent North Sea crude for June shed 36 cents to $119.56 in morning trade.

"The S&P credit downgrade of Spain is having a negative impact on the oil market, pushing prices down and weakening the euro," said Ken Hasegawa, energy desk manager at Newedge brokerage in Japan.

"The eurozone trouble is causing a lot of worry about demand," he added.

S&P on Thursday downgraded Spain's sovereign rating by two notches to BBB-plus and added a negative outlook, stating that it expected the Spanish economy to shrink both this year and next.

It also warned that the government's budget situation was worsening and that its banks would likely rely increasingly on official sources for funding as they grapple with piles of bad loans, especially in real estate.

Investors are keeping a close watch on Spain's debt situation, fearing that a Greek-style downward spiral in the country could trigger chaos in the market and ravage global energy demand.

Weak earnings data from the eurozone's leading banks also added to the bearish sentiment in the market, analysts said. (AFP)