Crude oil futures tumble ahead of looming Greece default

Investing.com - Crude oil futures tumbled on Monday, as Greece looked set to default on its debt repayment this week, dampening demand for growth-linked assets.

On the ICE Futures Exchange in London, Brent oil for August delivery hit a session low of $62.00 a barrel, the weakest level since June 5, before trading at $62.23 during European morning hours, down $1.03, or 1.64%.

Elsewhere, on the New York Mercantile Exchange, crude oil for August delivery lost $1.04, or 1.74%, to trade at $58.59 a barrel after touching a daily low of $58.49, a level not seen since June 8.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $3.64 a barrel, compared to $3.63 by close of trade on Friday.

The euro hit lows of 1.0953 against the dollar, the weakest since June 2, and was last at 1.1061, off 0.9% for the day, while the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.5% to 96.08.

European stock markets opened sharply lower, with Germany's DAX diving as much as 5% at the open, while U.S. stock futures plunged almost 2% at one point to hit a three-month low.

Markets were jittery after last ditch Greek debt negotiations broke down over the weekend, bringing the country a step closer to a debt default ahead of a looming deadline for a repayment to the International Monetary Fund on Tuesday.

Greece’s bailout is due to expire on Tuesday, the same day that Athens is due to repay €1.6 billion to the IMF, but without a rescue package in place Greece will almost certainly default.

Greek Prime Minister Alexis Tsipras abandoned negotiations with creditors on Saturday and called for a referendum to be held on July 5 on the terms proposed by lenders for extending the country’s bailout.

European finance ministers refused a request from the Greek government to extend the bailout program until after the referendum.

A Greek official said Monday that banks would remain closed for six days starting on Monday to avert a crisis in the banking sector after deposit outflows accelerated over the weekend. Withdrawals at ATM machines were to be limited to €60 a day per account.

Meanwhile, oil traders awaited the outcome of talks between Iran and world powers over Tehran's nuclear program later this week, which could result in a flood of Iranian crude returning to the market which is already oversupplied.

A final nuclear agreement between Western powers and Iran over the country’s nuclear program is due June 30, but officials already acknowledged that talks will likely extend beyond the deadline.