Crude oil futures hovered below $84 a barrel Tuesday as concerns over the euro zone debt crisis continued to weigh on the sentiment.
Light sweet crude for July delivery declined 0.27 percent to $83.75 a barrel in electronic trading on the New York Mercantile Exchange during European trading hours. Brent crude oil futures for July delivery fell 0.75 percent to $98.13 a barrel on the ICE futures exchange in London.
Investors are optimistic about the emergency teleconference among G7 leaders Tuesday, who are expected to put more pressure on the European leaders to act. Oil was higher in Asian trade Tuesday as bargain hunters moved in after recent sharp sell-offs and also hopes that policy makers in Europe would take measures to stem the debt crisis and regain the economic growth momentum.
Emergency talks for the G7 are a little bit dangerous because they raise expectations. Europe can go from bad to worse and China is obviously slowing. These two areas have a significant impact for general demand of most commodities, including oil, Ole Hansen, senior manager of trading advisory at Saxo Bank, told Bloomberg.
The news that China's services activity in May grew at the fastest rate in 19 months also added to the sentiment during Asian hours. China Services Purchasing Managers Index (PMI) rose to 54.7 in May compared to 54.1 in April, according to data released by HSBC Holdings Plc and Markit Economics.
Markit cited new business as the main factor behind the latest increase in services output. However, the latest services data contradicted the nation's official survey of services businesses released over the weekend, which showed that the both manufacturing and non-manufacturing sector grew at a slower pace in May.
Oil slumped to new 2012 lows Monday as a slowdown in job creation for the third straight month in the US and weaker-than-expected readings on China manufacturing and services PMI's raised concerns that global outlook is sharply deteriorating.