SINGAPORE: Oil extended losses in Asian trade Tuesday as investors' euphoria over a weekend deal for Spanish banks faded amid renewed concerns over the troubled eurozone.
Expectations that the Organization of the Petroleum Exporting Countries (OPEC) will raise its production quota also pressured prices.
New York's main contract, light sweet crude for delivery in July, was down 83 cents to $81.87 a barrel, a level last seen in October. Brent North Sea crude for July delivery shed 82 cents to $97.18 in morning trade.
"Oil tumbled... as fears that the eurozone debt crisis will engulf more countries and threaten petroleum demand reversed a rally sparked by Europe's plan to rescue Spanish banks," said Phillip Futures in a market commentary.
"Also pressuring prices, top exporter Saudi Arabia said OPEC may need to raise oil output targets at its Thursday meeting in Vienna," it added.
Analysts have turned cautious as recognition sank in that Spain still faced deep financial difficulties with Greece's landmark election -- which could decide whether the country stays in the eurozone -- only days away.
The situation in Italy is also being closely watched, as the rate of return on its 10-year bonds on Monday briefly soared over the six percent barrier which is seen as being unsustainable in the medium term.
OPEC's ministerial meeting Thursday could set the scene for further declines in oil prices as Saudi Arabia looks set to push through its plan to raise output quotas.
The 12-member cartel pumps one third of the world's crude supplies.