Forexpros – Crude oil futures were down for a second day on Monday, after Japan’s intervention in the foreign-exchange market triggered a spike in the U.S. dollar, dampening the appeal of commodities.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at USD92.56 a barrel during European morning trade, dropping 0.81%.
It earlier fell by as much as 1.2% to trade at a daily low of USD92.26 a barrel.
Earlier Monday, Japanese officials launched an intervention to curb the appreciation of the yen after the dollar fell to a record low of JPY75.56 in early trade.
Japanese Finance Minister Jun Azumi said Tokyo had acted on its own and would keep intervening until it was satisfied with the results. Azumi added that he ordered the intervention because “speculative moves” in the currency failed to reflect Japan’s economic fundamentals.
The greenback surged to a three-month high against the yen, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 1.23% to trade at 76.12.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Crude prices came under further pressure as concerns lingered over the euro zone’s debt crisis. European Central Bank Governing Council Member Jens Weidmann said earlier that Greece’s fundamental problems remain “unsolved” following last week’s euro zone summit.
Weidmann added that, “The future architecture of the currency bloc unfortunately still remains unclear.”
On Friday, ratings agency Fitch said that writedowns on Greek debt would indicate a default, while Italy’s borrowing costs rose to a euro lifetime high.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery shed 0.44% to trade at USD109.43 a barrel, with the spread between the Brent and crude contracts standing at USD16.87 a barrel.
Earlier in October, the gap between the two contracts widened to a record USD27.88 a barrel, but the differential has narrowed in recent sessions as expectations for the return of Libyan crude supplies has weighed on the Brent contract.
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