FX:Crude oil re-approaches 3-month low with Sandy in focus
Forexpros - Crude oil futures were under pressure during European morning hours on Monday, re-approaching last week’s three-month low as traders monitored the trajectory of Hurricane Sandy.
On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD85.54 a barrel during European morning trade, dropping 0.85%.
New York-traded oil prices fell by as much as 1% earlier in the day to hit a session low of USD85.36 a barrel. Futures fell to a three-month low of USD84.95 a barrel on October 24.
Trading activity was expected to remain thin on Monday, as Hurricane Sandy approached the northeastern U.S.
NYMEX floor trading will remain closed, according to exchange operator CME Group, while electronic trading of energy and other NYMEX products will be unaffected.
The U.S. National Hurricane Center said earlier that Sandy will likely make landfall near New York late-Monday or early-Tuesday. The storm’s maximum sustained winds strengthened to 85 miles per hour.
Sandy is forecast to converge with two other systems, creating a phenomenon the National Weather Service dubbed “Frankenstorm”.
Oil prices remained on the back foot, as increasing concerns over the outlook for global economic growth and the impact on future oil demand prospects dampened the appeal of the commodity.
Investors were jittery amid ongoing uncertainty over whether Spain is preparing to request a bailout from its euro zone partners, which would activate a bond buying program by the European Central Bank.
Meanwhile, doubts over whether Greece can meet austerity targets demanded by the troika mounted after the country’s opposition leaders said his party would vote against an austerity package expected to go before parliament later this week.
The euro re-approached a three-week low against the U.S. dollar, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.27% to trade at 80.32, close to a seven-week high.
A stronger dollar makes U.S. commodities more expensive for importers holding other currencies such as yen or euro.
Oil traders were awaiting Friday’s closely-watched U.S. nonfarm payrolls data after the unemployment rate unexpectedly fell to 7.8% in September from 8.1% the previous month.
Doubts over the U.S. economic recovery persisted in spite of Friday’s better-than-expected data on U.S. third quarter growth.
The U.S. economy grew by 2% in the three months to September, on the back of stronger consumer spending, after expanding by 1.3% in the preceding quarter. Economists had predicted growth of 1.9%.
The U.S. is the world’s biggest oil consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery shed 0.6% to trade at USD108.90 a barrel, with the spread between the Brent and crude contracts standing at USD23.36 a barrel.
London-traded Brent prices have outperformed New York crude in recent sessions, as a combination of lingering concerns over a disruption to supplies from the Middle East and worries over declining production in the North Sea-region have been supporting Brent prices.
