Singapore: Oil fell towards one-week lows on Monday as a rebound in the dollar prompted investors to halt their charge into commodities, while waiting for details about possible US economic stimulus measures.
US crude for November fell 70 cents to $80.55 by 12:33pm, extending last week’s drop of 1.7 percent. It touched $80.30 on Oct. 8, the lowest price since the beginning of the month, after reaching a five-month high of $84.43 a day earlier. December ICE Brent fell 56 cents to $81.89.
US Federal Reserve chairman Ben Bernanke on Friday offered his most explicit signal yet that the US central bank was set to ease monetary policy further in a debt purchase program described as a second round of quantitative easing, or QE2, but gave no details on when, or how aggressively, it might act.
“QE2, which had been progressively bullish for oil over the course of September and into early October, ran out of steam as a driver for prices, at least for the time being,” said Mike Wittner, Societe Generale’s head of oil market research.
The Fed next reviews policy on 2-3 November, when details about any stimulus moves and their implementation could be revealed.
US inflation unexpectedly slowed in September, despite a pickup in retail sales, the government said on Friday. A survey showed the country’s consumer sentiment unexpectedly dipped in early October to its weakest level since July.
Over the weekend, two top Federal Reserve officials argued for further aggressive action by the central bank, with one saying the economy needed “much more” help and the other pointing to Japan’s painful lessons.
The dollar strengthened by almost 0.5% against a basket of currencies on Monday, extending Friday’s gains from 10-month lows. Technical indicators pointed to the possibility of a further short-covering rebound.
Asian stocks were mixed on Monday, as optimism over further policy support for the world’s largest economy was offset by concerns over bank exposure to the U.S. mortgage market.
World stocks slid on Friday as concerns about a growing U.S. foreclosure crisis undermined an early boost from Bernanke’s speech indicating more monetary stimulus was on the way.
In France, President Nicolas Sarkozy faces a make-or-break week for his unpopular pension reform as rail and refinery workers, truck drivers and street marchers ramp up pressure to scrap it before a crucial Senate vote.
A three-week old strike at the French oil hub of Fos-Lavera is blocking 61 ships from unloading cargo, the port authority said on Sunday.
Key oil producer Saudi Arabia is holding a conference in Riyadh on Monday to mark the 50th anniversary of the Organization of the Petroleum Exporting Countries (Opec), which the kingdom’s oil minister Ali al-Naimi is scheduled to attend.
“Now we are entering growth because we went through a very, very bad recession. OPEC does not want to hinder that growth. We think $75-$85 will not hinder the growth of the economy,” OPEC secretary general Abdullah al-Badri said on Friday, a day after the producer group met in Vienna and agreed to hold output steady.
“What really concerns us is the value of the dollar, because member-countries’ income is being affected by this low level of the dollar,” the secretary general said.