Forexpros – Crude oil futures added to losses on Monday, tracking sharp losses in other industrial commodities as the U.S. dollar rallied following Japan’s intervention in the foreign-exchange market.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at USD92.16 a barrel during U.S. morning trade, dropping 1.25%.
It earlier fell by as much as 1.95% to trade at USD91.39 a barrel, the lowest price since October 27.
Crude’s losses came as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rallied 1.19% to trade at 76.11.
The greenback’s gains came after 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 Monday.
Japanese Finance Minister Jun Azumi said Tokyo had acted on its own and would keep intervening until it was satisfied with the results.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.
Crude prices came under additional 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.
Meanwhile, Italian ten-year government bond yields continued to creep higher, rising to 6.1%, the highest level since August 4 when yields climbed to 6.18%, as investors worried that European leaders’ plans to bolster the region’s lenders could fail.
Also contributing to losses, industry data showed that manufacturing activity in the Chicago-area slowed more-than-expected, falling to by 2.0 points to 58.4 in October from 60.4 in September. Analysts had expected the index to decline by 1.4 points to 59.0 in October.
The U.S. is the world’s largest oil consuming nation and manufacturing numbers are used as indicators for fuel demand growth.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery fell 0.88% to trade at USD108.94 a barrel, with the spread between the Brent and crude contracts standing at USD16.78 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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