Global crude futures lost further ground in early European trading,
following the falls ahead of settlement for both NYMEX WTI and ICE Brent at
the end of last week. But prices remained underpinned by ongoing weakness in
the US dollar, with the euro climbing to a fresh all-time high against the
dollar of $1.4286 Monday.
At 11:48 London time (10:48 GMT), front-month November ICE Brent futures
were firmly back below $80/barrel, losing 24 cents to $78.93/b, having hit an
all-time high of $81.05/b last Thursday.
The November NYMEX WTI contract lost ground as well, falling 20 cents to
$81.46/b.
However, the structure at the front end of both the WTI and Brent forward
curves remains backwardated, a significant factor in last week's rallies.
The new front-month December DME Oman futures contract was up 4 cents to
$75.09/b, while December ICE Dubai futures had not changed hands at the time
of writing.
"Markets are pretty quiet today. I think a few people are relieved about
the down move in prices," a London-based broker said. "Moreover, with the
hurricane season coming to an end without a major incident, it seems likely
that a dash of reality has returned to the market," he added.
At the end of last week, crude and product futures rallied to new record
highs and settlements, with ICE Brent the market leader this time on the back
of renewed tensions in Nigeria, the weak dollar, a swing back into
backwardation and big players trying to limit losses ahead of the end of the
third quarter.
Many market participants also raised doubts that increased fund buying
was a major driver of the rises last week.
The latest CFTC report showed that non-commercials, which include hedge
funds, liquidated 22,455 contracts of crude futures and options on NYMEX in
the week ending September 25, according to data released Friday by the US
Commodity Futures Trading Commission.
Fundamentally, recent fears seem to be easing, on the hurricane front as
well as surrounding Iran and other geopolitical factors, analysts said.
"The Iranian issue has been put on a backburner for a few weeks and there
is no serious tropical activity to consider. The Dollar Index remains very
weak and stands out as the main support but its weakness is starting to be
well priced-in. The immediate risk is to see a lower investment momentum as we
lose the end-of-quarter massaging and repositioning," analysts for Petromatrix
said in a report Monday.
October ICE gasoil fell heavily from its all-time high settle of
$712.50/mt last Friday, down $18 to $694.50/mt, tracking late-Friday losses in
crude futures.
The new front-month November NYMEX RBOB and heating oil contracts
weakened as well, losing 0.75 cents and 1 cent to $2.2181/gallon and
$2.0311/gallon, respectively.
--Verena Peternell, verena_peternell@platts.com