Crude futures fall on economic worries, stronger US dollar

08 October 2012 10:35  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures fell by more than $1/bbl on Monday, undermined by a stronger US dollar and continued concerns over the impact of the weak global economy on oil demand.

At 09:06 GMT, November Brent crude on London’s ICE futures exchange was trading at $111.31/bbl, down by 71 cents/bbl from the previous close. Earlier, the North Sea benchmark fell to a session low of $110.54/bbl, down by $1.48/bbl.

November NYMEX light sweet crude futures (WTI) were trading at $88.78/bbl, down by $1.10/bbl from the previous close. Earlier, the US benchmark declined to a session low of $88.27/bbl, down by $1.61/bbl.

The US dollar strengthened against leading currencies, making dollar-denominated commodities, like crude, less attractive to international investors.

On Monday, the World Bank lowered its 2012 growth forecast for China to 7.7%, citing concerns over the weakness of the country’s export markets in developed economies and reduced growth in investment. In May 2012, the World Bank had projected China to post an 8.2% growth this year.

The World Bank does not expect China to implement further large-scale monetary stimulus amid concerns over the property market.

The health of eurozone economies, in particular, those of the debt-laden nations of Greece and Spain, remained a major concern amid recent social unrest in Madrid and Athens.

A new eurozone rescue fund – the European Stability Mechanism (ESM) – is set to be launched at a meeting of the EU finance ministers later on Monday.

Meanwhile, heightened tensions in the Middle East generated by the Iran nuclear crisis and the Syrian civil war continued to place limits on downward price movements.

($1 = €0.77)

By: James Dennis
+65 6780 4327

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