MW: Crude trades lower on rising dollar, weaker stocks
Gasoline contract pulls back as natural gas trades flat
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures declined modestly Monday, hurt by a stronger dollar and declining equities, as investors awaited more details about Ireland’s pending bailout before committing to investments considered riskier.
Crude for January delivery (CLF11 81.65, -0.33, -0.40%) retreated 46 cents, or 0.6%, to $81.54 a barrel on the New York Mercantile Exchange.
Ireland said late Sunday that it had formally applied for aid from the European Union, with the International Monetary Fund also ready to take part.
After exhaling in relief, investors started to question whether a bailout would be enough and to wonder about the size and the scope of the package — details of which are still unknown.
The bailout had initially boosted the euro at the expense of the dollar, but the gains for the single currency proved short-lived. The dollar index (DXY 78.51, +0.01, +0.01%) recently was rising modestly to 78.53 from 78.47 late Friday.
The price of crude fell 4% last week on renewed concerns about Chinese policy tightening in addition to the ongoing European sovereign-debt worries.
Chinese authorities are likely to impose further tightening measures, the impact of which on demand growth for oil “will likely be limited,” analysts at Goldman Sachs said in a note to clients.
The “much bigger risk in the near term will come from the current exceptional strength in diesel demand, which could push Chinese oil demand to new highs in November and December,” they wrote Monday.
Global oil inventories have dropped as demand continues to increase at a faster pace than supply, they added.
Meanwhile, gasoline for December delivery (RBZ10 2.19, -0.05, -2.21%) retreated 2 cents, or 1.1%, to $2.17 a gallon in early trading.
Natural-gas futures (NGZ10 4.14, -0.02, -0.50%) started floor trading on the rise, but reverted lower as the December contract most recently traded a penny down at $4.15 per million British thermal units.
Prices for the fuel surged had nearly 4% on Friday and ended the week sitting on 9.5% gains.
