Oil Under Pressure As Dollar Strengthens
Crude-oil futures fell Tuesday in electronic trade, pressured by a strengthened U.S. dollar as it benefited from an improvement in manufacturing activity in Asia and Europe.
October crude oil futures fell 96 cents, or 0.9%, to $106.69 a barrel. Floor trading on the New York Stock Exchange will resume later Tuesday following Monday’s Labor Day holiday.
October Brent crude also fell, losing 73 cents, or 0.7%, to $114.24 a barrel.
Oil futures felt the weight of a stronger greenback following data on Monday that showed growth in the euro-zone’s manufacturing sector in August, with expansion picking up pace in Germany while it resumed in Spain. Markit’s euro-zone purchasing managers’ index for manufacturing rose to 51.4 from 50.3 in July. A reading above 50 indicates month-to-month growth.
The data dovetailed HSBC’s report of manufacturing growth in China last month, with a final reading of that PMI coming in at 50.1. The Chinese government’s manufacturing PMI, issued separately over the weekend, also rose.
The ICE dollar index , which tracks the U.S. currency against six rivals, extended its gains from Monday, rising to 82.258 from 82.118.
U.S. manufacturing data will be released later Tuesday.
An upswing in the global economy tends to bolster prospects for energy demand. But gains in the dollar on the back of improving data usually pushes prices for oil and other dollar-denominated commodities lower by making them more expensive to holders of other currencies.
“However, supply concerns amidst prospects of U.S. military action on Syria gave some support to the oil prices and limited the downside,” analysts at ICICI Bank wrote in a Tuesday report.
This week, the market will watch for weekly inventory figures from the U.S. Energy Department, the analysts said.
Meanwhile, the U.S. Senate Foreign Relations Committee is expected to hold hearings later Tuesday and Wednesday on President Barack Obama’s proposed military strikes against Syria. Obama is seeking congressional approval for limited military action in response to the use of chemical weapons by the Syrian government against civilians.
Concerns about a strike against Syria recently helped push Nymex October crude futures above $110 a barrel to mark their highest settlement since May 2011. But futures have since pulled back as risks of an imminent strike against Syria have decelerated.
Elsewhere in the energy markets Tuesday, October gasoline futures shed 1 cent, or 0.3%, to $2.88 a gallon. October heating oil rose a penny, or 0.2%, to $3.14 a gallon.
October natural gas futures gained 8 cents, or 2.3%, to $3.66 per million British thermal units.
Source : Marketwatch
