Forexpros – Crude oil futures erased earlier losses on Monday, bouncing off a six-week low as the U.S. dollar moderated some of the gains made following news of North Korean leader Kim Jong il’s death.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD94.47 a barrel during early U.S. morning trade, gaining 0.77%.
It earlier rose by as much as 0.9% to trade at a daily high of USD94.63 a barrel.
Monday’s turnaround coincided with the U.S. dollar trimming its gains against the euro ahead of a conference call of euro zone finance ministers later in the day.
Talks were to include plans to provide up to EUR200 billion in loans to the International Monetary Fund, as well as changes to the EU treaty that would allow a permanent EUR500 billion bailout fund to be established.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.09% to trade at 80.76, trimming an earlier advance of as much as 0.28%.
However, gains were limited as concerns over the risk of credit rating cuts continued to weigh after ratings agency Fitch lowered France’s credit outlook and put six euro zone countries on review pending possible downgrades on Friday.
Euro zone developments have dominated trading in the oil market for the last several months, amid worries that the sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Meanwhile, global financial service provider Commerzbank said in a report earlier that crude prices are “more susceptible to moves that aren’t fundamentally sound as oil volumes are likely to be decreasing slowly as we get nearer to Christmas.”
The report added that, “We may see some further volatility during this period because of the lower volumes.”
Crude prices came under pressure during the Asian session, trading close to a six-week low as a broadly stronger U.S. dollar and concerns over the economic outlook in the euro zone dragged down prices.
Demand for the greenback was boosted earlier following the announcement of North Korean leader Kim Jong il’s death, spurring fears of geopolitical instability in northeast Asia.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery jumped 0.93% to trade at USD104.31 a barrel, with the spread between the Brent and crude contracts standing at USD9.84 a barrel.
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