LONDON—Crude oil futures fell as a strong U.S. dollar, worries over weaker global oil demand and expectations that Libyan and North Sea production will return to the market in the coming weeks and months pushed prices lower.
In mid morning, the November Brent contract on London's ICE futures exchange was down by 81 cents, or 0.8%, at $101.95 a barrel. The November contract on the New York Mercantile Exchange was trading down $1.05, or 1.3% at $78.15 per barrel.
A faster-than-anticipated return of Libyan oil supplies as the country begins to resume production after the civil war there is weakening oil prices. Expectations that North Sea crude production will stabilize at close to normal levels after months of disruptions is also adding to the pressure on prices, said Credit Agricole analyst Christophe Barret.
This was reflected in the fall of the December Brent contracts, which fell below $100 a barrel for the first time since Aug. 9, when global markets plunged after a U.S. credit-rating downgrade. January Brent also fell below $100 a barrel.
"There is some tension on the very prompt market, but oil is seen going back to the market in the near-future," said Mr. Barret, adding that this factor has led to the November Brent contract trading almost $2 a barrel higher than the December Brent contract.
Analysts said that oil markets are facing another volatile week amid sovereign-debt woes in Europe and worries over the state of the U.S. economy.
"The fact is that even if there is a credible euro-zone survival package in place, it will not solve the fundamental problem of the growth deficit," PVM said in a note.
This week, oil market participants will be closely watching a speech by U.S. Federal Reserve Chairman Ben Bernanke Tuesday and the European Central Bank's interest-rate-setting meeting Thursday, as the dollar is likely to react to these events, said Olivier Jakob, managing director of Swiss consultancy Petromatrix.
A stronger dollar makes oil futures, denominated in dollars, more expensive for holders of other currencies.
U.S. manufacturing data, due later Monday, will also be in focus, as investors seek further indications of the health of the U.S. economy, the world's leading oil consumer.
The ICE's gasoil contract for October delivery was down $13.25, or 1.5%, at $870.25 per metric ton, while Nymex gasoline for November delivery was 130 points lower at $2.5251 per gallon.
Write to Konstantin Rozhnov at konstantin.rozhnov@dowjones.com
