Asian Crude Oil Futures Prices Drop with strong US Currency and Supplies

Crude oil futures prices declined in recent trading in Asia after a bearish oil inventory and a stronger currency of the United States.

In the NYMEX, light, sweet, crude for September delivery traded lower by 0.30 cents to reach an oil price per barrel of $88.67. In the ICE Futures Exchange of London, a similar drop was seen in Brent crude for September delivery as it fell by 0.27 cents for an oil price per barrel of $104.11.

Buying interest was thin with a stronger dollar compared to other main currencies, like the euro and yen, which make it difficult for investors who hold other currencies to afford dollar-priced crude. The ICE Dollar Index was higher at 83.745 versus its overnight value of 83.641.

Sentiment increased after the report of the Energy Information Administration that the petroleum supplies of the U.S. unexpectedly grew. According to the EIA, inventories rose in the past week by 2.7 million barrels compared to the expected 800,000-barrel draw.

The current oil prices have been sensitive to the crisis in the euro zone and the global economy’s health in the midst of signs of China’s declining momentum, which helped pull this year’s prices lower.

The current oil prices were under pressure following the report from the U.K that its economy dropped by 0.7% for quarter two of this year, the largest decline since quarter one of 2009.

However, in the midst of on-going bearish news on the economic side, investors appear to have disregarded the Iran-related risks on the supply side that have a big influence on the fragile oil market.

Reformulated gasoline blendstock for delivery in August gained 7 points to reach a per gallon price of $2.7936, while heating oil for August delivery traded lower by 56 points at $2.8384.

ICE gasoil for delivery in August changed direction with a $9.50 increase from the previous day’s settlement at $896.25 per metric ton.

By: Chris Termeer