Rising fuel costs may have slowed retail spending growth in the U.S., the world's largest oil user, to a four-month low in October, according to a Bloomberg survey. Oil and the dollar usually move in the opposite direction because a falling U.S. currency bolsters the appeal of commodities as an investment.
``The rebounding of the dollar is putting pressure on oil and other commodity prices,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``The weakness of the equity markets last week has also spilled over. These are the two main levers at work in the market today.''
Crude oil for December delivery fell $1.70, or 1.8 percent, to settle at $94.62 a barrel at 2:53 p.m. on the New York Mercantile Exchange. Futures climbed to $98.62 on Nov. 7, the highest intraday price since trading began in 1983. Prices are up 59 percent from a year ago.
``It looks like the global economy is slowing, which will have an impact on demand,'' said Kyle Cooper, director of research at IAF Advisors in Houston. ``Rising demand has been the main story for years now.''
China's October oil imports fell to the lowest since February as crude-oil prices rose to records. China is the second-biggest oil consumer.
Dollar Rises
The dollar rose 0.9 percent against the euro to $1.4548, from $1.4678 last week. It fell to an all-time low of $1.4752 on Nov. 9. In U.S. dollars, West Texas Intermediate, the New York- traded crude-oil benchmark, is up 55 percent so far this year. Oil is up 41 percent in euros, 47 percent in British pounds and 43 percent in yen.
Gold tumbled 3.2 percent, the most in 13 months, and silver plunged 5 percent after the U.S. currency strengthened.
Saudi Oil Minister Ali al-Naimi and Kuwait's acting oil minister said that OPEC may discuss an output boost, Agence France-Presse reported yesterday. Saudi Arabia is the group's largest producer and the world's top oil exporter.
``There is broad weakness across the commodity markets because of economic concerns,'' said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. ``The Saudi remark is leading traders to expect another 500,000 barrels of OPEC oil in the near future.''
Production Targets
The Organization of Petroleum Exporting Countries has no plan to discuss raising production targets at its Heads of State Summit in Riyadh on Nov. 17-18, oil officials from Iran and another Persian Gulf state said.
The group, which produces 40 percent of the world's oil, will discuss output during a Dec. 5 ministerial-level meeting in Abu Dhabi, United Arab Emirates, Iran's OPEC governor, Hossein Kazempour Ardebili, told the state-run Islamic Republic News Agency today.
Hedge fund managers and other large speculators raised their bets on rising prices to a three-month high in the week ended Nov. 6, according to U.S. Commodity Futures Trading Commission data. Their net-long position, the difference between orders to buy and sell oil, rose 27 percent to 22,696 contracts, the commission said.
Investors pushed prices higher the past five years as they poured money into energy because returns outpaced those of financial markets.
As of Nov. 9, investors held 41,133 options to sell December oil, known as call options, for $100 a barrel, according to the Nymex Web site. The options expire tomorrow.
``There's been a lot of attention on the $100 strike before expiration tomorrow,'' said Tom Bentz, a broker at BNP Paribas in New York. ``People who have made bets have to protect themselves. This works on the downside as well.''
Brent crude oil for December settlement fell $1.20, or 1.3 percent, to close at $91.98 a barrel on the London-based ICE Futures Europe exchange. Brent reached $95.19 a barrel on Nov. 7, the highest since trading began in 1988.
Via: Bloomberg| by Mark Shenk
