FU: Crude oil futures down for a 2nd day on dollar, demand concerns
Futures Pros – Crude oil futures were down for a second day on Tuesday in choppy, volatile trade as a broadly stronger U.S. dollar and concerns over declining demand from the world’s two biggest economies weighed on prices.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in June traded at USD112.59 a barrel during U.S. morning trade, slumping 0.45%.
It earlier fell by as much as 1.15% to a daily low of USD111.73 a barrel.
The U.S. dollar found support as risk sentiment weakened amid fears of reprisals after Sunday’s killing of Al Qaeda leader Osama bin Laden. The U.S. issued security warnings to Americans worldwide, while CIA Director Leon Panetta said Al Qaeda would "almost certainly" try to avenge bin Laden's death.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.07% to hit 73.34, after earlier rising to 73.49, rebounding from a three-year trough.
Meanwhile, data on Monday showed that the U.S. Institute for Supply Management’s manufacturing index declined to a fourth-month low of 60.4 in March from 61.2 in February.
Elsewhere, global financial service provider Credit Suisse lowered its forecast of China’s economic growth in 2011 earlier in the day to 8.8%, compared to a previous estimate of 9.1%.
Official Chinese data published late Sunday showed that the country’s purchasing managers’ index fell unexpectedly to 52.9 in April from 53.4 in March, confounding expectations of an increase to 54.0.
The U.S. is the world’s largest crude oil consumer, while China is the world’s second largest.
Despite the pullback, oil prices were expected to remain supported amid continuing violence in Libya, as forces loyal to Muammar Gaddafi shelled the rebel city of Misrata on Tuesday.
With the two sides locked in a stalemate, there seems little hope that the country's 1.3 million barrels a day of crude exports will return to the market any time soon.
Meanwhile, on the ICE Futures Exchange, Brent oil futures for June delivery dropped 0.63% to trade at USD123.89 a barrel, up USD11.30 on its U.S. counterpart.
