NewsRenewed fears regarding the European debt crisis pushes crude to drop below $70 per barrelPreviousForecastAnalysisCrude this morning receded below $70 per barrel due to renewed fears in financial markets regarding the European debt crisis, specifically news regarding the merger of four Spanish banks which increased the fear that the epidemic is spreading and holds the risk of freezing the financial sector once again.

Crude’s drop extended with risk aversion which was evident with the extensive euro depreciation versus the yen and the dollar; investors seem to be shying away from purchasing commodities as a result of the announcement regarding the merge of four banks in Spain which highlighted fears over the downside pressure on the recovery. Talks about the merge are a result of statements that have sent a wave of panic over investors due to fears of the budget crisis further spreading throughout Europe, therefore pushing lenders to merge with stronger partners.

As tensions rise in markets, investors seem to be stepping back from purchasing risky high-yielding assets, where it was clearly evident on crude oil, the euro, pound and global stocks that recorded a notable plunge yesterday and extending into the Asian session this morning.

Crude futures this month recorded dropped 21% from its high levels around $87.15 to last week's low around $64 per barrel, due to the escalating European debt crisis that had been sparked by Greece and persisting fears of it leaking into other countries.

Crude futures opened yesterday around $70.55 recording its highest around $70.92 and lowest around $69.55 per barrel, where it managed to close around $70.05 per barrel.

The S&P GSCI index in the late session recorded levels around 473.79 after adding 0.04 points; whereas the RJ/CRB Commodity index followed and rose by 0.55 points to close around 251.97.

As for NYMEX as of 03:14 EST; motor fuel plummeted to record $193.510 per gallon by $3.570; heating is trading around $186.750 per gallon after falling by $3.180; whereas natural gas also dropped by $0.002 to record $4.015 per 1000 cubic feet. In London, Brent plunged by $1.460 to record $69.710 per barrel.

Moreover, crude opened today around $69.80 recording its highest around $69.85 and lowest around $68.05 per barrel, while is currently trades around $68.30 per barrel.