MW: OIL FUTURES Crude Falls On Dollar Strength; EIA Data May Support
By Mari Iwata
TOKYO (MarketWatch) -- Crude oil futures fell Wednesday in Asia, extending overnight losses on the back of a stronger dollar in Asian morning trade.
The decline leveled off in the Asian afternoon as market participants awaited U.S. inventory data due at 1430 GMT that could show a draw in crude oil stocks and lend support to prices, analysts said.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $76.39 a barrel at 0624 GMT, down $0.41 in the Globex electronic session. October Brent crude on London's ICE Futures exchange fell $0.11 to $79.05 a barrel.
Crude prices were mixed in early Asian hours in the absence of clear direction, with near-month contracts falling and forward months trading higher, but once the dollar gained against the yen after the Japanese central bank intervened to buy greenbacks, other currencies' value against the dollar fell also, triggering a broad-based selloff of many commodities, including crude oil.
Japan's Finance Minister Yoshihiko Noda confirmed the USD/JPY intervention Wednesday morning--Japan's first currency intervention in more than six years.
Tokyo traders were "buying yen-priced commodities and selling dollar-denominated commodities to take advantage of a cheaper yen," said Hitoshi Inagawa, trader of broker Yutaka Shoji.
In the late afternoon, traders shifted focus to the U.S. Energy Information Administration's oil data. If the EIA numbers are in line with data issued Tuesday by the American Petroleum Institute that showed a surprising 3.3 million-barrel build in crude inventories, support could melt away in view of the average 2.5-million barrel draw estimated by analysts polled by Dow Jones Newswires.
Market sentiment isn't particularly dented by the API data, however, since the EIA data aren't always in line with API's, Newedge Japan trader Ryoma Furumi said. "If today's EIA report shows a large drop in crude stockpiles as expected, it may trigger a buying spree," he noted.
Nymex reformulated gasoline blendstock for October--the benchmark gasoline contract--fell 75 points to $1.9615 a gallon, while October heating oil traded at $2.1265, 23 points lower.
ICE gasoil for October changed hands at $674.25 a metric ton, down $3.00 from Tuesday's settlement.
