By Kristene Quan and Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch)—Crude-oil futures fell sharply in electronic trading Monday in line with other commodities and riskier assets such as equities, as the dollar appreciated on fears about global growth and dimming hopes of further U.S. quantitative easing.
Light, sweet crude for November delivery CLX2 -1.12% more than doubled losses seen in Asian trading, dropping $1.44, or 1.6%, to $88.46 a barrel on Globex, reaching the lowest level in just under a week according to FactSet.
Losses for oil were accompanied by weaker equities in Asia and Europe as better-than-expected U.S. jobs data on Friday triggered worries about how long the U.S. Federal Reserve will maintain its quantitative easing. See: Asia Markets.
See: Europe stocks drop with Greece, Spain in focus.
Oil futures settled at their lowest level in a week on Friday, shedding $1.83 per barrel, or 2%, on the New York Mercantile Exchange. The decline in oil came as data showed the U.S. jobless rate dropping to 7.8%, its lowest level since January 2009.
“Demand fears and declining hopes of large scale QE [quantitative easing] are causing the decline this morning,” said Carsten Fritsch, analyst at Commerzbank, in emailed comments.
Still, some analysts maintained the Fed’s policy was likely to remain accommodative despite the data.
The jobs data “still suggest an overall economy that is flying just moderately above stall speed,” said Timothy Evans, an analyst at Citi Futures.
“[The data] don’t give any sense of accelerating growth. Without that acceleration, we don’t see a risk that the Fed would curtail its $40 billion per month quantitative-easing program or any comparable policy shift,” he added.
Demand for commodities wasn’t helped by fresh worries over global growth. On Monday, the World Bank lowered its 2012 growth forecast for China to 7.7% from a May estimate of 8.2%, citing weaker domestic demand and slowing investment as China officials implemented austerity to cool off the housing market.
The World Bank also lowered its outlook for developing Asia to 7.2% from a May forecast of 7.6%.
The ICE dollar index DXY +0.27% , which measures the greenback against a basket of six major global currencies, jumped to 79.589 from 79.350 in North America on Friday. A stronger dollar tends to weigh on prices of commodities such as oil as it makes them less expensive to holders of other currencies.
Europe moved back into focus Monday, as investors continue to wait to see if Spain will make an official bailout request. The country is due to be a key topic of discussion when euro-zone finance ministers meet on Monday in Luxembourg.
The European Stability Mechanism, or the region’s permanent rescue fund, also comes into force Monday. Also, talks resume Monday between Greece and its international lenders.
Among other energy products, heating-oil for November delivery HOX2 -0.45% fell 0.7% to $3.13 a gallon, and gasoline for delivery in the same month RBX2 -0.27% fell 1 cent, or 0.5%, to $2.94 a gallon.
Natural-gas futures for November delivery NGX12 -0.27% were up 0.2% at $3.40 per million British thermal units.
Voters in Venezuela, one of the world’s biggest oil-exporting countries in the world, re-elected Hugo Chávez as president on Sunday, allowing him to serve another six years.
Andrey Kryuchenkov, analyst at VTB Capital, said the election result wasn't a huge surprise, and there was unlikely to be any reaction in oil prices on an intraday basis.
“Also don’t forget that despite all the ‘sword waving,’ he is, after all predictable and better than an unknown leader,” said Kryuchenkov, in emailed comments. “Moreover, they are still reliant on product imports including a substantial flow from the U.S.”
Kristene Quan is a MarketWatch reporter, based in Hong Kong.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
