London: Oil fell to below $69 a barrel on Monday, extending the previous session’s drop, pressured by jitters over the pace of US economic recovery and easing concerns about Iran and Nigeria.
The fall added to Friday’s drop of more than 1%, which took place as doubts over a recovery resurfaced after data showed US employers cut 263,000 jobs in September and the employment rate had soared.
“With US macro numbers taking a turn for the worst, the path of least resistance in a variety of energy complexes will be lower over the coming weeks,” said Edward Meir, analyst at MF Global.
“Along with energy’s uninspiring fundamentals, the complex has to also keep a wary eye on a faltering US equity market and the fact that two key geopolitical “props” -- Iran and Nigeria -- seem to be fading in terms of importance.”
US crude for November slipped $1.22 to $68.73 a barrel by 1307 GMT. The contract settled down 87 cents at $69.95 a barrel on Friday. London Brent fell $1.50 to $66.57.
The dollar was steady against a basket of currencies and European equities edged higher. A weaker dollar can boost investor demand for oil and other commodities.
“For now, the support on oil is coming more from the continued pressure applied on the dollar index than from the global economic data or from recent oil fundamental data points,” Olivier Jakob of Petromatrix said.
“We started last week with the need to price some geopolitical premium for Iran and Nigeria. We start this week with the need to take that geopolitical premium off.”
Oil gained nearly 6% last week, bolstered by a surprise drop in US gasoline inventories as well as tensions between major oil exporter Iran and the West over Tehran’s nuclear work.
Still, prices are likely to lose some support after Iran and the US described recent talks as productive and with Iran allowing United Nations inspectors into a uranium enrichment plant.
In a further easing of tension, the last prominent Nigerian militant leader agreed to halt fighting in the oil-producing Niger Delta and surrendered his weapons on Sunday.
Attention will focus later on the US Institute for Supply Management services index due at 1400 GMT. The service sector is thought to have been on the verge of growth in September after 11 months of contraction.
Oil hit a 2009 high of $75.00 in August and has rallied 55% so far this year. It hit a record high above $147 in July 2008, only to collapse in the following months as the economic crisis eroded demand.
Bank of America-Merrill Lynch said in a report oil may rise above $100 next year without policy action to curb demand or an unexpected supply boost, supported by continued “loose” monetary policy in developed economies.