Forexpros – Crude oil futures turned lower on the back of a broadly stronger U.S. dollar on Monday, as market sentiment weakened ahead of a keenly awaited European Central Bank meeting later in the week.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at USD89.79 a barrel during European afternoon trade, down 0.38%.
Expectations that the ECB is set to announce fresh policy measures to tackle the long running crisis in the euro zone mounted after bank head Mario Draghi pledged Thursday to do whatever is necessary to preserve the single currency.
But market sentiment remained fragile amid concerns that the central bank could disappoint market expectations.
Meanwhile, concerns over the outlook for the euro zone persisted after official data showed that Spain’s economy contracted 0.4% in the three month to June, extending the recession into a third quarter.
A separate report showed that the European Commission’s index of economic sentiment across the euro area dropped to a 34 month low in July, with confidence in Spain, Germany and France all dropping sharply.
The euro weakened against the U.S. dollar, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies was up 0.37% to 82.97.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.
Meanwhile, investors were looking ahead to the outcome of the Federal Reserve’s policy setting meeting on Wednesday, amid speculation over whether the bank will hint at further easing measures.
On Friday, the Commerce Department said U.S. gross domestic product expanded by 1.5% in the three months to June, after growing by an upwardly revised 2.0% in the first quarter.
Investors have interpreted signs of slowing U.S. economic growth as increasing the likelihood that the Federal Reserve will implement more stimulus measures to shore up the economic recovery.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Oil prices remained supported by ongoing tensions in the Middle East, as intense fighting continued in Syria and threatened to spill over into neighboring countries, including major oil producers.
Later Monday, U.S. Treasury Secretary Timothy Geithner was to meet with German Finance Minister Wolfgang Schaeuble and Mario Draghi to discuss the European, U.S. and global economies.
On the London based ICE Futures Exchange, Brent oil futures for September delivery fell 0.51% to trade at USD105.92 a barrel, with the spread between the Brent and crude contracts standing at USD16.13.
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