×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Oil falls over $1 on profit-taking

Oil falls over $1 on profit-taking
Comment E-mail Print Share
First Published: Fri, Oct 07 2011. 03 47 PM IST
Updated: Fri, Oct 07 2011. 03 47 PM IST
London: Oil prices slipped more than $1 to below $105 on Friday as some London traders took profits following the sharp move up in Brent at the close of the previous session after oil had been bolstered by central bank money creation.
Brent crude futures were down $1.10 to $104.63 a barrel at 1:49pm, following Thursday’s strong performance, where Brent closed $3 up.
US crude was down 73 cents to $81.86 a barrel, after settling up $2.91 a barrel on Thursday.
Traders in London expressed surprise at the strong close in the United States in the previous session and suggested the move downwards on Friday reflected profit-taking by the European market.
Also weighing on sentiment was the news that credit agency Moody’s had cut its ratings on British banks Lloyds and Royal Bank of Scotland and that the UK government would have to continue to support the country’s systemically important financial institutions.
But the oil markets are still on track for weekly gains after the European Central Bank (ECB) announced steps to recapitalise banks, easing concerns about the region’s economy and demand for fuel and energy.
“We are seeing a consolidation move after yesterday’s strong gains, which were caused by external factors such as the hopes of reviving Europe’s banking system, the decisions by the ECB and the Bank of England, and rising stock markets,” said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.
Michael Hewson, an analyst at CMC Markets, also attributed yesterday’s strong close to the liquidity injections from the ECB and the Bank of England.
“If you flood the market with liquidity, that liquidity has got to go somewhere,” he said. “(The moves by the two central banks) have made people think it’s only a matter of time before the Fed follows suit. I think they could be waiting a long time for that to happen.”
Traders and investors are also looking to crucial US jobs data expected later today to take the temperature of the world’s biggest economy.
“Today’s jobs numbers will be really important for the US to see if we get a little bit more bullishness,” said Jeremy Friesen, a commodity strategist at Societe Generale in Hong Kong.
Commerzbank’s Fritsch suggested the week’s late rally might prove to be short-lived given the negative economic outlook. “Prices may come down again today depending on the US non-farm payrolls this afternoon.”
Gold and copper were also on course to post weekly gains on hopes that policymakers in Europe were getting to grips with the sovereign debt crisis.
Oil prices will also come under pressure as supplies increase. Rising output from Libya and other oil-producing regions is weighing on crude along with the broader economic weakness, the head of Exxon Mobil Corp said on Thursday.
Comment E-mail Print Share
First Published: Fri, Oct 07 2011. 03 47 PM IST
More Topics: Markets | Oil | Crude | Brent | US |