CG: Oil down 2% on stronger U.S. dollar, weaker European stocks
Oil dropped more than 2 per cent to below $68 a barrel on Monday as a stronger dollar and weaker European equities outweighed attacks on the oil industry in top African exporter Nigeria.
Nigeria's main militant group said on Sunday it had attacked three oil installations belonging to Royal Dutch Shell in the Niger Delta, widening a month-old offensive against Africa's biggest energy industry.
"We've got weakening stock markets and the dollar is starting to strengthen," said Rob Montefusco, a trader at Sucden Financial. "Also technically, it all broke down on Friday."
U.S. crude for July, which expires later on Monday, fell $1.72 to $67.83 by 1309 GMT. It traded as low as $67.67 intraday, the lowest price since June 8. Brent crude slipped $1.54 to $67.65.
European stocks lost ground and the dollar rose against a basket of other major currencies. A stronger dollar can limit the appeal of oil and commodities to investors.
Chart patterns are also pointing lower for crude. Both Brent and U.S. crude closed below the $70 mark on Friday, a bearish technical development. Even so, crude has more than doubled from a low of $32.40 in December.
Rebels in Nigeria have been carrying out attacks on the oil industry for years in what they claim is a struggle for a fairer share of the region's energy wealth.
Also supporting the market was data showing China's implied oil demand rose 6 per cent in May over a year ago, its fastest growth since August 2008. China is the world's second largest user of oil.
In the Middle East, Iranian opposition leader Mirhossein Mousavi urged supporters to continue protests over the re-election of President Mahmoud Ahmadinejad, in a direct challenge to the Islamic Republic's leadership.
Some analysts say the political turmoil in Iran, a major oil exporter, so far is of limited significance for the markets due to high levels of unused production capacity and inventories. Others see it as supportive.
"The deterioration in the Iranian situation should prevent a sharper sell-off," said Edward Meir, analyst at MF Global.
Crude oil speculators on the New York Mercantile Exchange slashed their net long positions nearly in half in the week to June 16, data showed on Friday. Long positions are bets that prices will rise.
