Investing.com - Crude prices dropped sharply on Monday as investors tried to assess the demand impact from the failure of talks with Greece to renew a bailout agreement and China's weekend rate cuts.
On the New York Mercantile Exchange, crude oil for delivery in August fell 1.32% to $58.84 a barrel.
Greece's banks and stock exchange are expected to remain closed throughout the week following a recommendation from the country's Financial Stability Council late Sunday, according to some reports.
The move came just hours after the European Central Bank froze Emergency Liquidity Assistance (ELA) support to the country's banks at levels agreed on June 26 - a figure estimated to be around €90 billion.
"The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area," the ECB said in a statement. "The Governing Council is determined to use all the instruments available within its mandate."
At the weekend, Greece's parliament approved a move put forth by Prime Minister Alexis Tsipras for a national referendum that will decide the fate of the country's bailout negotiations on July 5.
The poll effectively ended stalled talks in Brussels and likely ensures that Greece will be unable to make a "bundled" €1.55 billion payment to the International Monetary Fund on Tuesday - the same day its current (extended) bailout program expires.
At the weekend, the People's Bank of China cut interest rates and its deposit rate to 4.85% and the deposit rate to 2% respectively from Sunday.
The PBoC also announced that it will cut the reserve requirement ratios (RRR) by 50 basis points for commercial banks serving rural areas, agriculture and small businesses.
The PBoC has now cut interest rates four times since November and this year also reduced the amount of cash banks must keep in reserve three times, as well as using other measures to inject liquidity into the market.
Last week, crude oil futures inched lower on Friday, as investors nervously eyed developments in Greece’s debt talks ahead of a looming repayment deadline.
U.S. oil futures pared losses after industry research group Baker Hughes (NYSE:NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. fell by three last week to 628. The drop marks the 29th straight week of declines.
U.S. oil production has held around 9.6 million barrels a day in recent weeks, the highest level since the early 1970s.
Elsewhere, on the ICE Futures Exchange in London, Brent for August delivery hit a session low of $62.50, the weakest level since June 22, before closing at $63.26, up 6 cents, or 0.09%. For the week, London-traded Brent futures tacked on 69 cents, or 0.38%.
In the week ahead, investors will be looking ahead to the latest U.S. employment report, due for release one day ahead of schedule on Thursday, for signs of improvement in the labor market, which the Federal Reserve is a key factor in deciding when to start hiking interest rates.
On Monday in the euro zone, Germany and Spain are to release preliminary data on consumer inflation.
Later Monday, the U.S. is to publish a report on pending home sales.