Singapore: World oil prices continued their falls in Asian trade on Tuesday, 9 October, as the market focussed on rising supply and a stronger US dollar, dealers said.
New York’s main oil futures contract, light sweet crude for delivery in November, was 17 cents lower at $78.85 a barrel in morning trade.
The contract had plunged $2.20 to $79.02 per barrel in late US trades on Monday.
Brent North Sea crude for November delivery was 22 cents lower at $76.36 per barrel after dropping $2.32 in London.
Prices have fallen sharply since New York oil prices burst through the $80 level for the first time last month and went on to hit an all-time peak of $84.10.
Brent oil hit a record high of $81.05 per barrel in late September.
Steve Rowles, an analyst with CFC Seymour in Hong Kong, said that with the Atlantic Ocean hurricane season virtually over, and rising crude supplies, the market is focussing on supply and demand fundamentals.
“I think that the market’s just sort of rebalancing itself,” Rowles said.
The Gulf of Mexico is a leading oil-producing region for the United States and Mexico. Investors worry about storm damage to oil rigs and other infrastructure during the long Atlantic hurricane season that ends in November.
Crude oil stocks rose by 1.2 million barrels, a report last week by the US Department of Energy (DoE) showed, and Rowles said the market’s consensus forecast is for another rise this week when the latest DoE report is issued.
At the same time, demand remains stable, he said.
The strengthening US dollar has added to downward pressure on oil prices, Rowles said.
A stronger US currency makes dollar-denominated commodities, such as crude oil and gold, more expensive for buyers using weaker currencies.
The euro fell to 1.4032 in morning Asian trade, from 1.4042 in late New York trade on Monday.
In recent weeks, the euro had hit a series of record peaks against the dollar, which helped to boost oil prices.
Sucden analyst Michael Davies said during US trading hours that the fall in oil prices came on concerns over a possible slowdown in the US economy and uncertainty about the outcome of a recent credit crunch in the world’s biggest economy.
“Overall, many fear that an economic slowdown in the US could dent demand for energy.”
But Rowles said the focus should remain on market fundamentals, as growth from China and other nations will continue to drive demand while concerns over a US slowdown are easing.
“It looks like growth is not going to be as slow as some in the market are expecting,” Rowles said.