SYDNEY (MarketWatch) — Crude-oil futures declined in electronic trading on Tuesday as a hike to margin requirements dampened sentiment toward the commodity.
Light, sweet crude futures were down 1.5% at $101 a barrel in Nymex electronic trading after CME Group said it will raise margin requirements for a wide variety of crude-oil contracts, effective Tuesday.
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Stocks climbed Monday as commodity prices recovered from last week's slump.
Under the changes, the requirement for a new position in benchmark Nymex crude contracts rises to $8,438 from $6,750 previously. The maintenance margin for benchmark Nymex crude rose to $6,250 from $5,000.
The hike was the first of its kind since early March and the third move this year.
Tuesday’s weakness in Asian trading hours followed a strong performance for oil futures in regular New York trading on Monday.
Crude oil for June delivery CLM11 -1.60% ended the day up $5.37, at $102.55 a barrel, having risen as high as $103.40 at one point in the day, and above the $100-a-barrel level for the first time since last Wednesday.
Oil fell sharply in tandem with other commodities last week, amid concerns about the trajectory of global growth, and after margin requirements were lifted for silver trading.
However, a strong reading for U.S. jobs on Friday alleviated some concerns about economic growth going into the new week.
“Crude’s open interest has soared over the past week, meaning that there were a host of new shorts coming into the market, many of whom presumably had to cover on Monday after the market refused to break down,” said analysts at MF Global.
The analysts said they believed that there could be large daily moves for the oil price in the short term, adding that “the intense volatility over the past week has been palpable.”
Sarah Turner is MarketWatch's bureau chief in Sydney.
