The FINANCIAL — Oil prices fell below $72 a barrel on September 21 in Asia as dealers took profits from a 5 percent rally earlier in the week and the U.S. dollar bounced from a near-one-year low. U.S. crude for October delivery fell 43 cents to settle at $72.04 a barrel while London Brent fell 23 cents to $71.32.
"The market is a little nervous after the slide on the Shanghai stocks market," said Michelle Kwek, an analyst at Informa Global Markets in Singapore, according to Reuters. "Risk appetite is down and that's prompting traders to take profit in oil and other commodities." Asian stocks eased on Monday, pulling further away from 13-month highs hit last week, as investors worried prices may have raced too far ahead of economic fundamentals, with shares in China feeling supply pressures ahead of a string of IPOs.
The Shanghai Composite Index .SSEC, China's key stock index extended the previous session's decline and fell as much as 3 percent on Monday, weighed by fresh signs the stock regulator was pushing more shares, including those from a new second board, into the market, the same source reported. Oil prices were also pressured by bearish comments from Sinopec, Asia's top refiner and China's second-largest oil and gas producer, that diesel demand in China continues to lag economic recovery, with fuel sales so far this year still below the rates seen a year ago.
The recession has sapped American fuel consumption, and U.S. oil stockpiles are 14 percent larger than last year even as recent data suggests the economy is clawing out of recession, AP gives information. The Energy Information Administration said Wednesday that the country also is sitting on a sea of distillate fuels including heating oil, with stockpiles approaching a 27-year high.
"Most of the macro data from the U.S. over the last month has been supportive of oil prices," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney, the same source reported. "But inventories remain high and demand is weak, so that's capping prices." Moore said crude will likely average $64 a barrel in the fourth quarter before rising to average $80 in the October to December period of 2010.
Oil prices started the week below $70 a barrel, then rose on strength in equities markets and heavy losses in the U.S. dollar that boosted the purchasing power of commodities buyers using other currencies, according to Reuters. The ICE Futures U.S. dollar index, which tracks the value of the greenback, rose on Friday from a near one-year low as investors covered short positions and softer equities in Europe and Asia cooled risk appetite.
The same source gives information that oil was also under pressure from a government report this week showing growth in U.S. refined fuel inventories, with distillates at their highest levels since 1983.
Natural gas for October delivery added 32 cents Friday to settle at $3.778 per 1,000 cubic feet on the New York Mercantile Exchange, Comodity Online reported. Just as oil prices spiked and then levelled off earlier this year, natural gas prices jumped more than 44 per cent after sinking to $2.40 per 1,000 cubic feet on September 4.
The dollar traded at $1.4691 per euro from $1.4712 in New York on Sept. 18. It fell to $1.4767 on Sept. 17, the weakest level since Sept. 25, 2008, according to the same source.
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