Oil prices fell more than 2 percent Tuesday after the Greek decision to call a referendum over its debt bailout revived concerns about the euro zone, even as Chinese and UK data pointed to more global economic slowing.
The euro recovered some losses and oil prices were well above session lows after Germany's Angela Merkel and France's Nicolas Sarkozy agreed in a phone call to continue to push implementation of last week's European Union summit decisions. Greek Prime Minister George Papandreou's decision to let Greeks vote on a bailout package pressured global equities, the euro and oil prices, while economic data from China, Britain and the United States reinforced concerns about slowing economies and curbed oil demand growth.
Investors also kept monitoring reverberations from Monday's bankruptcy filing by futures brokerage MF Global Holdings Ltd. ``A big part of the day's downdraft came from the surprise referendum announcement from Greece and the turmoil at MF Global is adding to the general bearish mood of the market,'' said Mark Anderle, a broker at TAC Energy in Dallas. ICE Brent December crude fell $2.70 to $106.86 a barrel by 11:52 a.m. (1552 GMT), having slumped as low as $106.10.
An extension of this week's slide could bring a test of support at Brent's 300-day moving average of $104.06. U.S. December crude fell $3.03 to $90.16 a barrel, back above its 100-day moving average of $89.53 after tumbling to $89.17. Brent's premium to its U.S. counterpart increased a bit, but continued to hover above $16.50 a barrel.
Crude trading volume improved from Monday's anemic totals, with U.S. volume 53 percent below its 30-day average and Brent 41 percent below its 30-day average approaching midday in New York. Both were on pace to easily top totals from the previous session. (Additional reporting by Christopher Johnson and Zaida Espana in London and Rebekah Kebede in Singapore; Editing by David Gregorio)