Briefly higher during Asian hours, prices fizzle
By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures traded lower Monday, off their highest prices in more than three months as concerns about Europe returned to plague markets and the dollar strengthened.
Crude for December delivery CL1Z -0.77% declined $1.10, or 1.1%, to trade at $97.89 a barrel on the New York Mercantile Exchange. It had briefly traded higher during Asian trading hours.
Oil had closed out Friday’s North American session with a 5% gain for the week, settling at $98.89 a barrel and at its best since late July. Read more about Friday's oil moves.
Europe remained in focus at the start of the trading week, after Mario Monti, a former member of the European Commission, was named to lead a new Italian government in the wake of the resignation of prime minister Silvio Berlusconi.
“Markets are languishing this morning, having expended all the hopefulness it could on the latest from Europe,” analysts at Kilduff Report said in a note to clients. Trading was also tentative ahead of macroeconomic data this week, including a read on inflation, they added.
Hopes that the new government would be more capable of pushing through structural reforms need to tackle the nation’s debt problems — and prevent them from spreading — helped boost equity markets across Asia on Monday.
U.S. stocks slipped at the open, however, as European stocks also swooned following comments by German Chancellor Angela Merkel.
Merkel said it was time for a “new Europe” by completing political union, and said she rejects selling joint bonds backed by euro-zone countries, according to reports.
Although the comments were not new, it reiterated market fears Germany still may not be comfortable with shouldering responsibility for the euro zone, analysts have said.
Also helping take off the table the gains amassed after Monti’s nomination, industrial production in Europe fell 2%, in line with expectations but raising the specter of a recession for the 17-country bloc.
Analysts believed oil was marching toward $100 a barrel however.
Credit Agricole global oil analyst Christophe Barret said prices are likely to remain supported over the coming months.
“Disappointing non-Organization of the Petroleum Exporting Countries (OPEC) supply, delays to Libyan exports and political disruptions have tightened prompt market supplies,” Barret said.
“With refinery activity resuming to meet winter fuel demand and record-low crude inventories in northwest Europe, prices are likely to remain supported until the end of the first-quarter of 2012, posting a sharp decline thereafter,” he said.
“The economy, as always, remains the wild card,” Barret said.
The dollar index DXY +0.73% , which compares the U.S. unit to a basket of six other currencies, rose to 77.425, from 76.949 in North American trading late Friday.
A stronger greenback is a negative for oil and other commodities, as it makes them more expensive for holders of other currencies.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Virginia Harrison is a MarketWatch reporter based in Sydney.
