SINGAPORE: World oil prices declined in Asian trade Monday as the US currency’s recent gains sapped appetite for dollar—denominated commodities including oil, dealers said.
Persistent worries about slowing economic growth globally were also pushing prices lower, they said.
New York’s main contract, light sweet crude for October delivery, dropped 14 cents to $114.45 a barrel. The October contract shed over six dollars on Friday to close at 114.59.
Brent North Sea crude for October delivery fell 26 cents to $113.66. It closed Friday at $113.92, down $6.24.
“The persistently gloomy outlook for the US economy and oil demand and spread of the economic downturn from the US to Europe is weighing on prices,” said Victor Shum of energy consultancy Purvin and Gertz.
“Also as the US dollar gains strength, the oil pricing comes down. So the movement in the US dollar is also driving oil in the short term,” he said.
Commodities including crude oil futures are denominated in dollars, and any gains in the US unit will usually dent demand for such products by holders of foreign currencies because it makes those products more expensive.
In Asian trading, the euro was trading at $1.4737 compared with $1.4779 in New York late Friday.
The dollar’s movement this week will be the key influence on oil prices this week, said Shum.
“This week I expect oil will move depending on the US dollar movement,” he said, adding he expected prices between $110 and $122.
Traders said the market is now looking ahead to a meeting of the Organisation of the Petroleum Exporting Countries (OPEC) in September. OPEC produces about 40% of the world’s crude.