Crude erases losses on hopes Cyprus may soften tax on smaller deposits

Investing.com - Oil prices erased earlier losses stemming from a European Union decision to slap a tax on bank savings in Cyprus, sparking fears the sanctity of bank deposits may now be over amid eurozone bailouts.

Cyprus itself may determine if and by how much small bank depositors will be affected, which erased earlier losses.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded up 0.05% at USD93.50 a barrel on Monday, off from a session high of USD93.75 and up from an earlier session low of USD91.79.

The tax taking aim at Cypriot bank deposit holders as part of a EUR10 billion bailout deal sent oil falling amid fears uncertainty may grow since smaller depositors will be affected, which could spook other markets and slow broader European economic recovery, crimping demand for fuels and energy in the process.

The move also jolted investors on sentiment that an era of eurozone bailouts that avoided touching bank deposits may now be ending.

Oil erased earlier losses and found some support after the Cypriot parliament delayed voting on the measure and possibly soften the blow on smaller depositors.

Russia was quick to criticize the move in Cyprus, home to large amounts of Russian deposits.

Elsewhere on the ICE Futures Exchange, Brent oil futures for May delivery were down 0.44% at USD109.33 a barrel, up USD15.83 from its U.S. counterpart.