Crude oil hits four-day low as equities decline
Published 07/09/2010 | 11:16
Oil declined to trade near a four-day low, as falling equity markets reinforced doubts about the global economic recovery while the end of the US summer peak consumption season signaled lower demand from refiners.
Yesterday’s US Labour Day holiday marked the end of the driving season.
Refiners often idle units for maintenance in September and October as petroleum demand drops and before heating-oil use increases.
The Stoxx Europe 600 Index fell as much as 0.7pc. Asian stocks also declined, with the benchmark MSCI Asia Pacific Index snapping four days of gains.
“Weak Asian markets and the weak start in Europe are pushing oil lower,” Gerrit Zambo, a trader with Bayerische Landesbank, said from Munich.
Crude for October delivery dropped as much as $1.39, or 1.9pc, to $73.21 a barrel in electronic trading on the New York Mercantile Exchange and was at $73.29 at 10:06am.
Yesterday’s transactions will be booked with today’s trades for settlement purposes, as there was no floor trading on Labour Day.
Brent crude for October settlement declined 89 cents, or 1.2pc, to $75.98 a barrel on the ICE Futures Europe Exchange in London.
Crude also dropped as the dollar gained for a second day against the 16-nation euro, reducing the appeal of commodities as an alternative investment.
The US currency was at $1.2769 to the European currency, up from $1.2876 yesterday in New York.
“Equities are weaker and the dollar is stronger, so for the next few days we’re likely to move in a $70-$75 range,” Frank Schallenberger, head of commodities research at Landesbank Baden-Wuerttemberg, said from Stuttgart.
Rising crude oil inventories in the US, the world’s biggest oil consumer, are also weighing on petroleum prices, Schallenberger said. US stockpiles of crude are currently about 5pc higher than a year ago.