Crude down $1/bbl, lowest in 3 months on strong dollar

17 May 2010 07:21  [Source: ICIS news]

By James Dennis

SINGAPORE (ICIS news)--Crude futures fell more than a $1/bbl (€0.82/bbl) on Monday pushing prices down to their lowest level in three months as the US dollar strengthened amid growing worries over European debt and high US oil inventories, traders said.

At 05:40 GMT, June NYMEX light sweet crude futures were trading at $70.23/bbl, down $1.38/bbl. Earlier the US benchmark fell to an intra-day low of $69.82/bbl, down $1.79/bbl, its weakest level since early February this year.

At the same time, July Brent on London’s ICE futures was trading at $76.69/bbl, down $1.24/bbl from the previous close. The North Sea benchmark had earlier fallen to a session low of $76.35/bbl, down $1.58/bbl and the lowest level since late February. The June ICE Brent futures contract expired last Friday.

Crude prices have fallen sharply since hitting intra day highs for the year in early May with NYMEX light sweet crude futures tumbling around 19% since then and Brent down roughly 14%.

Monday’s crude price decline followed a sharp rise in the value of the US dollar, which was triggered by growing worries over oil demand from the debt ridden economies of Europe.

The International Monetary Fund (IMF) in its latest Fiscal Monitor report warned that developed countries faced an urgent need to cut their budget deficits. The IMF said that failure to control the deficits would harm economic recovery.

Equity markets in Asia fell sharply on Monday amid worries over European debt with the Nikkei Index in Japan down more than 2%.

Meanwhile, recent increases in US crude and product inventories have raised worries about demand in the world’s leading economy.

Data from the US Energy Information Administration (EIA) released last week revealed that crude stocks held at the land locked Cushing terminal in Oklahoma rose to a record level of 37m bbls.

The Cushing terminal is the delivery point of NYMEX light sweet crude, and the build-up of stocks there has pushed WTI progressively lower relative to Brent since mid April.

($1 = €0.82)

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By: James Dennis
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