London: Oil prices dropped below $75 a barrel on Monday, tracking a parallel course with falling European equity markets and reacting to a resurgent dollar.
Nymex crude for January delivery fell 54 cents to $74.93 a barrel by 0925 GMT. The contract fell 99 cents to settle at $75.47 a barrel on Friday.
The spread between first and second month WTI was nearly $1.90 contango.
Brent crude was down 36 cents at $77.16 a barrel, more than $2 above front month Nymex.
The forward crude for WTI is steepening with the 24th month contract last traded at $90.05 versus 89.74 on 1 December, while the front month has fallen 4.3% from $79.04 this month.
“As far as this week goes, a resurgent dollar will spell further weakness for crude, doubly so if gold gives up its spectacular gains,” analyst Stephen Schork wrote in the Schork Report newsletter.
Gold prices fell 2% to a low of $1,135.80 an ounce in Europe on Monday, pressured by the dollar’s rise to five-week highs against the euro, a factor undermining the precious metal’s appeal as an alternative asset.
European shares retreated on Monday after touching a two-week closing high in the previous session, surging 1.1% on Friday after data showed US employers cut fewer jobs in November than expected.
The dollar edged up on Monday against a basket of currencies , rising 0.17% to above 76 points, its highest level since 5 November. “What we’re seeing on Monday morning is a bit of dollar strength following on from Friday and a reaction in financial markets by oil,” said broker Tony Machacek at Bache Financial.
Looking ahead to the end of the week, a raft of Chinese data including import numbers will offer more guidance with expectations for crude imports to remain high.
Sentiment also saw a boost after oil ministers from Arab producers said they were comfortable with current prices and several on Friday saw no need for Opec to change its output targets when it meets in Angola this month.