London (Platts)--25May2010/804 am EDT/1204 GMT

Global crude benchmarks were sharply lower in European morning trading Tuesday as bearish sentiment from concerns about the health of the Spanish economy and the eurozone as a whole fed through into the energy markets.

At 11:00 GMT, July ICE Brent futures traded at $68.94/b, down $2.23 from the overnight settle although off from the intra-day low of of $67.86/b, the lowest the front-month has been since February. The July WTI on NYMEX was at $67.87/b, a fall of $2.34/b.

The euro sank as low as $1.2178, close to a four-year low, while financial markets also fell across Europe.

"This continues the concerns about European debt particularly in Spain," Tony Machacek, broker at Bache Commodities, said.

"Investors are still fretting about the euro, which weakened considerably on Monday after the Spanish government took control of a struggling savings bank over the weekend," Edward Meir, analyst at MG Global, said in a report Tuesday.

"[The] concern is whether the euro crisis will result in substantially slower European growth which, in turn, could affect prospects in both the US and China," Meir said.

As a result of the gloomy picture dominating the markets, analysts believe that caution in the energy market is required as demand for oil resulting from an improvement in the global macroeconomics seem currently remote.

"We are starting to favor the short side once again. The inability of the markets to gain any significant upside traction given the relative stability in the euro and despite the oversold conditions does not bode well for further advances," Meir added.

Despite the major drop in oil prices since the start of this month, OPEC remains neutral for the time being. Kuwait's oil minister Sheikh Ahmed Abdullah al-Sabah said Tuesday he was not yet worried by the recent fall in oil prices to below $70/barrel and there was no need for OPEC to hold an extraordinary meeting at this time.

--Walid Kurdi, walid_kurdi@platts.com