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Crude oil prices moved lower on Tuesday as investors exited riskier assets, following the failed negotiations between Greece and its creditors, primarily the European Union.
Greeks took to the streets to protest against austerity following a bank shutdown and with the nation headed to a referendum on Sunday, price action is likely to remain volatile throughout the week.
Brent crude futures were down 16 cents at $61.85 a barrel early on Tuesday, after falling to $62.01 on Monday, their weakest finish in almost a month, heading for a second straight monthly decline.
US crude WTI dropped 20 cents to $58.13, having closed down $1.30 at $58.33 a barrel, its lowest settlement since June 8.
Technical analysts said that crude oil prices tested trend line support and appear to have edged through an upward sloping trend line that connects the lows in May to the lows in June and comes in near $58.20. The next level of target support for crude is seen near the May lows at $56.75. A close below this level would target the March low near $50 per barrel. Resistance is seen near the 20-day moving average at $60.14.
Any resolution to the crisis in Greece is unlikely before Sunday’s referendum on a new bailout.
Investors are also looking at the US government's June payrolls report on Thursday for an indication that the US Federal Reserve might raise interest rates as early as September, and talks on Iran's disputed nuclear programme going on in Vienna.
The Vienna talks would continue past Tuesday's deadline for a comprehensive agreement intended to open the door to ending sanctions in exchange for limits on Iran's most sensitive nuclear activities for at least a decade.
Summing up, analysts said that the current oil price slump is far from over.
Following the oil price collapse of 2014-2015 that began a year ago this month, the world has crossed a boundary in which prices are not only lower now but will probably remain lower for some time.
“It represents a phase change like when water turns into ice: the composition is the same as before but the physical state and governing laws are different,” said one analyst.
