LONDON, May 18 (Reuters) – Oil prices slipped towards $107 a barrel on Friday as investors fled risky, growth-sensitive assets on fears that Greece would leave the euro, although short-covering provided some support for Brent.

Brent crude was down 16 cents to $107.33 a barrel by 1348 GMT after slipping to its lowest level for the year at $106.40 earlier in the session. U.S. crude was down 67 cents to $92.89.

Traders and analysts said short-covering was providing a floor for Brent futures, but the overall trend remains to the downside given the uncertainty over what will happen with Greece.

A downgrade by Moody’s of the credit ratings of 16 Spanish banks has added to the contagion gloom.

“The driving factor is still what is going on in Europe with the downgrades of the Spanish banks and very negative sentiment towards risk investments,” said Eugen Weinberg, an analyst at Commerzbank in Frankfurt.

Although the bank downgrades and Greece’s failure to find a consensus in the first election round were anticipated, Weinberg said the potential fall-out had not been fully priced in.

“Once it happens, the market understands how serious things are. The risks are not yet completely reflected in the price.”

LONDON, May 18 (Reuters) – Oil prices slipped below $107 a barrel on Friday and hit a 2012 low as investors fought shy of riskier, growth-oriented assets on fears that Greece would leave the euro, and after a downgrade of 16 Spanish banks by Moody’s added to the gloom.

Brent crude was down 59 cents to $106.90 by 0849 GMT after earlier slipping to its lowest level for the year at $106.40. U.S. crude was down 7 cents to $92.49.

“The driving factor is still what is going on in Europe with the downgrades of the Spanish banks and very negative sentiment towards risk investments,” said Eugen Weinberg, an analyst at Commerzbank in Frankfurt. “It’s not surprising to see further falls in Brent today.”

The euro fell to fresh four-month lows as the dollar strengthened, putting commodities priced in dollars under more pressure.

Weinberg said that although the Spanish bank downgrades and Greece’s failure to find a consensus in the first election round had been anticipated, the potential fall-out had not been fully priced in.

“Once it happens, the market understands how serious things are. The risks are not yet completely reflected in the price.”

The lack of a Greek government is raising fears about a disorderly exit from the euro as without a government it cannot implement austerity measures in exchange for rescue funds.

LONDON (Reuters) – A sell-off in energy equities triggered by the fall in crude oil prices and risk-averse investors hugging defensive sectors is creating some attractive bargains, said Lombard Odier fund manager Michael Hulme.

“The market seems to be anticipating a Greek exit from the euro and that has taken energy stocks down much further than seems to be justified, but we have a large number of companies on the substitutes bench that are getting to mouth-wateringly cheap levels,” said Hulme, manager of the Lombard Odier Global Energy Fund.

The fund is currently about 10 percent in cash, which Hulme sees as a reserve to put to work if prices fall further.

“Exploration and production companies and oil service companies have underperformed the market quite spectacularly over the last 18 months,” he on Wednesday at the Reuters Global Energy and Environment Summit in said in London.

“It’s quite disappointing, but it’s also a fantastic opportunity. Companies are trading on about three or four times operating cashflow and generating reasonable returns on invested capital. But we need people to look beyond their concerns about market volatility.”

Energy shares have been clobbered this year by falling oil prices and investors steering clear of more growth-oriented segments due to the poor economic outlook.

“The market has been lurching headlong along the pier like a drunken sailor,” said Hulme. “When things settle down the value will be apparent in the quality franchises.”

LONDON (Reuters) – Oil industry executives and bankers are assuming oil prices will stay above $100 a barrel in the year ahead, despite mounting economic worries, as any fall below that level would trigger a cut in Saudi Arabia’s output and force closures at high-cost projects around the world.

A straw poll by Reuters of oil executives, traders, bankers and fund managers showed seven respondents predicting Brent crude trading at $100-$120 a barrel in the next 12 months. Four respondents saw prices at $120-$140 and only four at $80-$100.

At a previous summit last June, most respondents also saw prices above $100.

Then worries centered around supplies following a full outage of Libyan output and OPEC’s failure to boost production to compensate for the loss.

By contrast, the current mood is dominated by demand concerns as euro zone collapse worries, poor U.S. economic data and signs of slower demand in China overshadow jitters about a potential loss of Iranian oil supplies.

But although Brent prices are almost $20 down from their 2012 peaks at $110 a barrel, few expect a repeat of the 2008 crash which saw them collapsing to $34 per barrel from an all time high of $147 in a space of six months.

“The marginal cost of production is the ultimate floor in the oil market. In the North Sea it can be $80 to $100 dollars,” said Andrew Moorfield from Scotiabank.

LONDON (Reuters) – Allianz Energy is targeting oil companies developing cost-effective, repeatable processes in the shale industry rather than those investing in complex one-off projects that are vulnerable to cost inflation.

“Historically, the oil industry was about producing one-off projects of pretty high complexity,” said Christopher Wheaton, manager of the Allianz Energy Fund, which has some 145 million euros under management.

“I’m trying to find companies that go down a manufacturing-style route, giving you lower unit costs, higher cash flow and higher profits.”

Wheaton, speaking at the Reuters Global Energy and Environment Summit, cited Plains Exploration & Production (PXP.N: Quote, Profile, Research), Pioneer Natural Resources (PXD.N: Quote, Profile, Research), EOG (EOG.N: Quote, Profile, Research) and Concho Resources (CXO.N: Quote, Profile, Research) as examples of companies with repeatable processes.

“With U.S. shale oil plays you can drill the same wells over and over again. And given where oil prices are, you’re making fantastic returns,” he said.

He contrasted this with oil companies that had been tripped up by the rising complexity of their projects, highlighting the ballooning cost of ENI’s Kashagan project in the Caspian Sea.

Energy sector share prices have underperformed the broader market this year, hammered by falling oil prices and risk averse investors, who steer clear of the more growth-oriented segments when the economic outlook is poor.

LONDON, May 11 (Reuters) – The slow take up of Europe’s new cleaner ICE gasoil contract will be overcome if the exchange follows the U.S. approach and amends its existing contract rather than running two versions in parallel until 2015, market participants said.

Lack of liquidity in the new contract is posing a problem for fund managers and traders looking to switch, and has led to suggestions ICE should follow the Chicago Mercantile Exchange’s example and simply change the specification of its old contract.

Olivier Jakob, an analyst at Petromatrix, said it was hard for people to leave the more liquid contract. “It’s difficult to run parallel contracts – the money will go where you have the liquidity. Everyone waits for everyone else to move.”

Open interest in ICE’s new low sulphur gasoil contract is still only around 1 percent of that in the old contract, although physical traders say the new contract is better aligned with market requirements.

The new contract needs to establish enough liquidity to attract fund manager flows, but this poses a catch-22 as the commodity indices and the passive money tracking them are still in the old contract.

Jodie Gunzberg, commodities director at S&P Indices, said there were strict eligibility criteria for including new contracts in the S&P GSCI, a popular commodities index. “Liquidity is a major factor in the decision,” she said. “One of the key benefits of the S&P GSCI is that it is trackable.”

Traders have criticised ICE’s decision to run the old contract alongside the new until January 2015, even though this was only implemented after extensive consultation with market participants.

LONDON, May 11 (Reuters) – Falling oil prices and a worsening economic growth outlook are hitting energy equity fund returns this year, despite a pick-up in investor flows in early 2012.

Investor sentiment turned against growth-oriented investment areas such as energy in mid-March as economic data began to sour. A sell-off in the oil price in May also hit energy stocks and compounded their underperformance against the broader market.

The average energy equity fund registered in Europe flatlined in the first four months of 2012, returning just 0.01 percent in sterling versus a 0.13 percent return by the average natural resources fund, according to Lipper, a Thomson Reuters company that provides fund data and analysis.

U.S.-registered energy equity funds also underperformed their near peers in the 12 months to end-April. The average energy fund lagged natural resource equity funds and utility funds, even though crude oil prices rose in 2011.

“The energy-related funds have really taken a beating, generally underperforming the average fund in their classifications,” said Tom Roseen, head of research services at Lipper in the United States.

As well as the double-whammy of a poor growth outlook and falling oil prices, the energy sector has been hit by a range of company-specific issues in 2012.

These include a gas leak at Total’s Elgin platform in the North Sea, Argentina’s expropriation of Repsol’s YPF assets and a financial scandal at Chesapeake Energy.

LONDON, April 30 (Reuters) – Oil prices held steady above $119 per barrel on Monday as the prospect of a third round of liquidity stimulus by the United States and a weaker dollar continued to support commodities despite slower economic growth around the globe.

Brent June crude futures were down 48 cents to $119.35 a barrel by 0921 GMT, on track to close down for the second consecutive month. U.S. crude was down 35 cents at $104.58 a barrel.

Analysts said the market was effectively trading sideways following data on Friday which showed slower-than-expected U.S. GDP growth in the first quarter, raising hopes of a fresh liquidity injection.

“There are two factors at play that are preventing another sharp drop at the moment – the weaker U.S. dollar and the expectation that the Fed will come up another round of quantitative easing,” said Carsten Fritsch, an energy analyst at Commerzbank in Frankfurt. “That is supporting commodity prices.”

The dollar hit a two-month low against a basket of currencies on Monday. A weaker dollar makes commodities priced in dollars more affordable for buyers using other currencies.

The dollar is likely to come under more pressure if this week’s data, including the key U.S. jobs numbers, disappoints.

“If growth in the U.S. is going to be weaker than the Fed and the market expect, then the Fed will have to act,” said Jeremy Friesen, a commodities strategist at Societe Generale.

LONDON (Reuters) – Oil prices eased on Friday, trading at around $119.50 a barrel, due to renewed fears about the state of debt-laden eurozone economies following a downgrade of Spain’s credit rating.

Traders and investors took a more cautious stance after Standard & Poor’s reduced its credit rating on Spain by two notches to BBB+, citing expectations that the government’s finances will deteriorate more than previously thought due to a shrinking economy and an ailing banking sector.

S&P also put a negative outlook on the credit and said Madrid’s situation could deteriorate further unless ambitious measures were taken at the European level.

Brent crude, widely used as a global oil benchmark, was down 50 cents to $119.42 a barrel by 1030 GMT, after rising in the past two sessions. U.S. crude oil slipped 45 cents to $104.10 a barrel.

Traders and analysts said that oil prices were holding up relatively well on a quiet news day, with euro/dollar levels driving some of the intraday movements.

“The Spanish downgrade rekindled the smoldering fears of Europe, but there hasn’t been much else to fan the flames,” said Nick Trevethan, senior commodity strategist at ANZ in Singapore.

“It looks like a very quiet end-of-the-week market,” agreed Tony Machacek, a trader at Jefferies Bache in London.

LONDON, April 27 (Reuters) – Oil prices dipped below $120 a barrel on Friday on renewed fears about the state of the debt-ravaged eurozone economies following a downgrade of Spain’s credit rating.

Traders and investors took a more cautious stance after Standard & Poor’s reduced its credit rating on Spain by two notches to BBB+, citing expectations that the government’s finances will deteriorate even more than previously thought due to a shrinking economy and an ailing banking sector.

S&P also put a negative outlook on the credit and said Madrid’s situation could deteriorate further unless ambitious measures were taken at the European level.

Brent crude was down 42 cents to $119.50 a barrel by 0818 GMT, after rising in the past two sessions. U.S. crude oil slipped 39 cents to $104.16 a barrel.

“The cut by S&P was the main reason for the price fall overnight, but we also saw strong gains yesterday with oil rising back above $120 a barrel despite over-supply and signs that tensions over Iran are easing,” said Carsten Fritsch, an energy analyst at Commerzbank in Frankfurt. “Today’s decline is not a big surprise given this backdrop.”

Filip Petersson, a commodity strategist at SEB, agreed. “The general market sentiment is a bit bearish this morning. The direction in markets that offers the least resistance is down,” he said, noting that most markets were down about half a percent in early trade.

“We shouldn’t expect much of a turn in market sentiment until we get the U.S. Q1 GDP numbers this afternoon,” he added.