By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch)—Crude-oil futures edged lower on Monday, along with global equity markets, as investor enthusiasm for riskier assets waned slightly.
Crude for October delivery CLV2 +0.29% fell 28 cents to $98.71 a barrel in mid-afternoon European trading hours. Oil touched a high above $100 a barrel on Friday partly due to concerns that unrest in the Middle East and North Africa could trigger supply disruptions.
Another round of stimulus promised by the Federal Reserve last Thursday also drove investors toward riskier assets. Crude settled 69 cents higher, or 0.7%, at $99 a barrel on Friday. For the week, crude rose 2.7%, the biggest weekly gain since mid-August.
Analysts at Commerzbank said Monday that the question remains as to whether plans by the Fed announced last week, to buy $40 billion a month of mortgage-backed securities for an unlimited period, will offer lasting support to the U.S. economy this time or just result in another bout of temporary relief for financial markets. On Thursday, oil futures closed at a four-month high in wake of the Fed news.
“Although we see growing risks of speculative overheating on the oil market, the price climb is likely to continue given the phases of exaggerated price rises we saw following previous rounds of quantitative easing,” said the analysts in emailed research comments.
The analysts said that in the current environment of healthy risk appetite, any news of an escalation of the Middle East situation would “fall on fertile soil and be more likely than before to result in accelerated price increases,” the analysts said.
“This is also how the rhetoric of the Iranian oil minister should be interpreted when he said that oil prices should climb to over $150 per barrel in order to better reflect the market situation,” they added.
On Friday, Muhammad Ali Khatibi, the country’s governor with the Organization of Petroleum Exporting Countries, said in an interview with Dow Jones that prices aren’t too high and shouldn’t be blamed for global economic problems. Economists have fretted that if oil prices rise too much, they could hamper economic recovery in the U.S. and other nations.
Khatibi said oil prices had been at a higher level earlier this year—at $127 a barrel in March. “Compared to that peak, the price is not high,” he said. He also said currency changes and inflation meant the current price won’t have the same effect as it did five or six years ago. Read Iran official says oil prices aren't too high.
Also Monday, October heating oil HOV2 +0.01% was flat at $3.24 a gallon and October gasoline RBV2 +0.00% was off 1 cent, or 0.3%, to $3.01 a gallon.
Natural gas for October delivery NGV12 -2.65% rose 1 cent to $2.95 per million British thermal units.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
