By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — Benchmark crude-oil futures declined in electronic trading Monday but held above $101 a barrel, in line with broad selling across commodity and equity markets.
Crude for February delivery CL2G -0.61% shed 40 cents, or 0.4%, to $101.16 on the New York Mercantile Exchange during Asian trading hours.
The softer start to the trading week followed a 2.8% rise for oil last week, as some positive U.S. economic reports supported the prospects for energy demand, while concerns about the spread of Europe’s debt crisis limited gains.
European jitters nagged investors further on Monday, weighing on Asian equities and the euro EURUSD +0.13% , ahead of a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel later in the day. Read more on Asia market action.
Commerzbank strategist Barbara Lambrecht said an escalation of a potential conflict involving Iran and possible oil-supply disruptions — as well as a string of monthly supply reports — are expected to dominate oil markets this week.
Last week, Iran signaled it might close off the passage through the Strait of Hormuz in retaliation for economic sanctions from the U.S. and Europe announced last week.
“This week, attention [will be] focused on the consequences of the European Union’s impending oil embargo, which could be decided definitively at the end of January,” Lambrecht wrote in a research report.
The dollar strengthened in Asian trading Monday, with the dollar index DXY +0.10% , which compares the U.S. unit to a basket of six rivals, rose to 81.404, from 81.271 in North American trade late Friday.
A stronger greenback can discourage investment in crude, as it makes the commodity more expensive to holders of other currencies.
Virginia Harrison is a MarketWatch reporter based in Sydney.
