WSJ: Crude Falls Slightly As Dollar Remains In Focus
By LANANH NGUYEN
LONDON—Crude-oil futures were slightly lower Monday, recovering from earlier losses as the market continues to track the dollar.
"We have to keep on watching the dollar—that is the main driver right now," said Ole Hansen, manager of futures and fixed income at Saxo Bank in Copenhagen. "We're getting a little QE2 fatigue…that's taken a little bit of the pressure off of the ongoing dollar selling."
Mr. Hansen was referring to expectations that the U.S. Federal Reserve will carry out a second round of quantitative easing, which has weighed on the dollar in recent days. The U.S. currency bounced earlier Monday as market participants backed away from aggressive dollar selling after a speech from Fed Chairman Ben Bernanke on Friday.
Crude-oil prices tend to fall when the dollar strengthens because it makes the dollar-denominated commodity more expensive for holders of other currencies.
In recent trade, the front-month December Brent contract on London's ICE futures exchange was down one cent at $82.44 a barrel.
The front-month November light, sweet crude contract on the New York Mercantile Exchange was trading 16 cents lower at $81.09 a barrel.
The ICE's gasoil contract for November delivery was down $8 at $703.75 a metric ton, while Nymex gasoline for November delivery was up 80 points at 211.18 cents a gallon.
The oil market was also eyeing widespread strike action in France, which has disrupted or halted production at the country's 11 operating refineries. A strike at the southern Fos-Lavera port also continued into its 22nd day, causing a backlog of 65 ships off the world's third-largest oil port.
"So far, no end to the problems is in sight—in fact the situation is likely to get worse with new strike action from truck drivers and rail workers expected," said Vienna-based consultancy JBC Energy.
In terms of technical charts, bullish momentum was slowing down for Brent crude, said Clive Lambert, director of trading advisory FuturesTechs.
"We posted a reversal pattern on Wednesday and Thursday called 'Dark Cloud Cover'…the dark clouds appear to be gathering," he said. Dark cloud cover occurs on candlestick charts when, during an uptrend, a move above the previous day's high is followed by a closing price that is within the previous day's candle body.
Brent prices have broken a key support level at $81.86 a barrel, and the next trend support is pegged at $81.23 a barrel, Mr. Lambert said.
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