Oil under pressure from strengthening dollar
Oil fell in Asian trade on Monday as prices came under continued pressure from a strong dollar and US demand concerns, analysts said.business Updated: Dec 14, 2009 11:46 IST
Oil fell in Asian trade on Monday as prices came under continued pressure from a strong dollar and US demand concerns, analysts said.
New York's main contract, light sweet crude for January delivery, was down 70 cents to 69.17 dollars a barrel.
Brent North Sea crude for January delivery eased 52 cents to 71.36 dollars a barrel.
"Oil is under pressure because of worries about the strength of the US dollar," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.
"Although the dollar has weakened this morning, the trend over recent days was a strengthening dollar," he said.
In Asian trade on Monday, the dollar fell to 88.83 yen from 89.08 in late US trade on Friday while the euro changed hands at 1.4634 dollars from 1.4613.
The anticipation of a rate hike spurred the dollar higher in recent days as investors sought better yields, making dollar-priced oil more expensive to buyers using other currencies.
"I do think the dollar will remain a leading driver of oil (in the near-term)," said Shum.
Existing worries over sluggish US energy demand was also another factor undermining oil futures, he said.
"US demand is weak, that is adding to the weight on oil."
The US is the world's largest oil user but demand has been affected by the country's worst economic slump since the Great Depression.