MW: Crude futures extend losses as dollar strengthens
Energy traders digest OPEC data, await API inventories update
By MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures declined 1% Tuesday as the dollar strengthened and U.S. stocks opened lower, casting doubts about the prospective demand for oil.
Crude for November delivery (CLX10 81.94, -0.27, -0.33%) dropped 83 cents to stand at $81.34 a barrel in early trading on the New York Mercantile Exchange. Contracts for other energy products such as gasoline and natural gas also fell.
“Oil prices are lower, in tandem with stock markets and after Saudi Arabia signaled that OPEC may leave production targets unchanged,” wrote analysts at Action Economics.
In its monthly market update Tuesday, the Organization of the Petroleum Exporting Countries revised higher by 100,000 barrels a day its forecast for global oil demand for 2010, putting the projection at 1.1 million barrels a day.
OPEC will meet in Vienna on Thursday. Saudi energy officials were quoted Monday as saying that oil supplies are adequate and that oil’s current range of $70 to $80 is adequate.
Thus, OPEC isn’t expected to “provide any support from the fundamental side,” said analysts at JBC Energy in a note to clients Tuesday.
The crude contract finished slightly lower on Monday. Traders will get their first glimpse of the inventories picture later Tuesday as the American Petroleum Institute releases its weekly report.
More closely watched data from the Department of Energy are expected Wednesday.
In other trading, gold futures also declined, while the U.S. dollar gained against its major rivals. The dollar index (DXY 77.57, +0.13, +0.17%) , which tracks the greenback’s performance against a basket of other major currencies, rose 0.4% to 77.75.
A stronger dollar tends to weigh on oil prices because it makes oil more expensive for holders of other currencies.
Also Tuesday, natural gas for November delivery (NGX10 3.56, -0.04, -1.08%) retreated 2 cents, or 0.4%, to $3.59 per million British thermal units.
November gasoline (RBX10 2.16, +0.00, +0.08%) was off 3 cents, or 1.3%, to $2.14 a gallon.
