What's Moving the Oil Markets?

•Crude futures lost further ground Monday, following the falls ahead of settlement 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 10:48 GMT, Nov ICE Brent was down 24 cents to $78.93/b, having hit an all-time high of $81.05/b last Thursday. Nov NYMEX WTI fell 20 cents to $81.46/b.

•"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, 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.

Updated: October 1, 2007