Oil prices took a hammering on Monday from growing fears of a sovereign debt default in either the US or one of the euro zone countries.
Traders were also concerned that the worsening debt crisis may slow economic growth and reduce fuel demand.
In addition the International Energy Agency is to considering releasing more of its emergency stocks. The IEA is expected to confer with its member countries some time this week to see if they would back that. Last month, member countries released 60 million barrels, only the third such move in the IEA’s history.
Oil prices reversed Friday’s gains as nervous investors took refuge in gold, which hit record highs in Canadian dollars and South African rand on Monday after earlier touching an all-time high in dollar, euro and sterling terms.
Policymakers on both sides of the Atlantic have offered no clear solutions to markets on their respective debt problems, forcing investors into perceived ‘safe havens’.