Brent regains ground after slide, but dollar weighs
Brent crude futures edged up on Monday, recovering from a three-day decline, but a firm dollar after robust U.S. employment data fueled bets for an interest rate hike before the year is over kept a lid on prices.
The dollar held near its loftiest in almost seven months versus a basket of currencies after U.S. nonfarm payrolls jumped 271,000 in October, far exceeding the 180,000 increase that economists polled by Reuters had predicted.
The dollar’s strength is likely to extend ahead of a likely rate increase by the Federal Reserve in December, and could be a key drag on prices of oil and other commodities, said Ben Le Brun, market analyst at OptionsXpress in Sydney.
A stronger greenback makes dollar-priced assets more costly for buyers using other currencies.
On the other hand, “the U.S. economy is running on its own steam now and in a position where the Federal Reserve deems that a small interest rate hike is not going to damage confidence in the economy,” said Le Brun.
“That should be a positive in terms of demand for crude.”
Brent crude for December delivery was up 40 cents at $47.82 a barrel by 0407 GMT, after falling more than 1 percent on Friday.
December U.S. crude gained 37 cents to $44.66 a barrel after touching a 1-1/2-week low of $43.83.
Hedge funds raised their bullish wagers on U.S. crude last week by the most in six months, data showed on Friday, as speculators bought into oil contracts in forward months on the bet market fundamentals will take time to improve.
Weekend data from China, the world’s No.2 oil consumer, showed the country’s crude oil imports fell 5.7 percent from the previous month to 26.35 million tonnes in October.
But while China’s crude imports dropped to 6.2 million barrels per day (bpd) from 6.8 million bpd from September, the volume was still up 9.4 percent from a year ago and 8.9 percent higher in January-October.
“Chinese demand for crude oil will counter the downturn in demand as refiners in the northern hemisphere go through autumn maintenance and reduce their crude purchases,” BMI Research said in a note.
“Available data indicates that this maintenance season will be shorter than previous years … as refiners are keen for facilities to be turned around quickly while crack spreads remain high.”
source: Reuters
