Global crude futures drifted lower Monday in European morning trading,
with the market treading water after a strong end to the session late Friday.
Oil prices continued to track the US dollar index, which is the main
price indicator of late with few fundamentals to overshadow technicals,
analysts wrote.
At 10:29 GMT the November ICE Brent crude futures contract was down 31
cents at $78.59/barrel. The November WTI contracts on both ICE and NYMEX moved
42 cents lower to $80.80/b.
"The dollar index is currently a key input to oil trading and it has
started to take such a predominant role that even intra-day trading patterns
in WTI have become responsive to intra-day movements on the dollar index,"
Petromatrix analysts wrote in a report.
So far today, the US dollar has strengthened against both the euro and
the pound and this has led to a small decline in oil prices.
On Friday, weakness in the US dollar and a recovery in equity markets
pushed crude prices back up to settle near Thursday's levels.
On a fundamental note, Iran's crude oil production will rise by 70,000
b/d from November 1, taking its output to 4 million b/d in line with the
latest OPEC decision to increase overall production by 500,000 b/d, a senior
Iranian official was quoted as saying Monday (see story 09:10 GMT).
Later in the week, the market will be looking toward the latest
International Energy Agency report due out on October 11. In last month's
report the IEA trimmed its oil demand forecast for 2007 and 2008, blaming
recent mild weather and the expected impact of continued high oil prices on
demand.
Analysts are expecting to see similar data in the new report.
"We would expect the IEA to repeat the downward revision on the
call-on-OPEC that they had to do in the last report," Petromatrix wrote.
Largely as a result of its demand forecast adjustments, the IEA trimmed
its "call" on OPEC crude and stocks by 200,000-300,000 b/d for the second half
of 2007 and for 2008.
The Middle East November Oman futures contract was down 43 cents to
$75.04/b. No trades or bid/offer interest was seen on the ICE Dubai futures
contracts.
ICE gasoil was down 50 cents/mt, with the October contract at $691.50/mt.
US NYMEX heating oil fell with the October contract down 70 points to
$2.2165/gallon. NYMEX RBOB traded at $2.0390/gal, 1.03 cents lower.
--Jean-Luc Amos, jean-luc_amos@platts.com