US crude falls $3.75/bbl on world economic fears, stronger dollar

03 October 2012 20:56  [Source: ICIS news]

HOUSTON (ICIS)--NYMEX light sweet crude for November delivery settled at $88.14/bbl on Wednesday, down $3.75 versus the previous close, tracking a stronger dollar, weak economic data from China and concerns that the eurozone may have fallen back into a recession.

The dollar received a boost from data showing an improvement in employment and in the US services sector.

The sell-off overshadowed the weekly supply statistics from the Energy Information Administration (EIA), which showed a contrary to forecast, although small, drawdown in crude inventories. Gasoline inventories rose slightly, contrary to expectations of a drawdown, while distillate inventories fell sharply.

The focus of the EIA report, however, was a decline in gasoline demand, a reflection of a struggling economy.

Aggressive length liquidation also penetrated technical sell-stops, extending the losses.

During the normal floor session, November West Texas Intermediate (WTI) plunged to $88.05/bbl, down $3.84, before settling just above the session’s low. The downside momentum rolled onto electronic trading, with November crude hitting a low of $87.70/bbl before attempting to rebound.

November ICE Brent established an intra-day low of $108.05/bbl and settled at $108.17, down $3.40. The losses were also extended afterwards, bottoming out at $107.67/bbl before rebounding.

By: Ignacio Sotolongo
+1 713 525 2653

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