Crude oil futures fall on stronger US dollar

Crude oil futures Monday fell as the US dollar strengthened a tad while worries over high oil product stocks and technical resistance weighed on the market. On NYMEX, light, sweet crude oil futures for October delivery traded at $68.24 a barrel at 0625 GMT, down $1.05 in the Globex electronic session, after having posted the biggest single-day decline in two weeks Friday. October Brent crude oil on London’s ICE Futures exchange were down 68 cents at $67.00 a barrel.

“We have been riding a rollercoaster of a market that cannot choose between equities, currencies or fundamentals,” wrote Peter Beutel, the president of Cameron Hanover, an energy advisory firm, in a note to clients. “Last week, just as all three turned bullish, the market decided that the resistance overhead was just too strong to break.” He added the major support levels for crude were at $67 and $65.20 but “closes lower would be bearish.”

“At times when oil prices push higher, investors would stop and look at fundamentals again,” said Ben Westmore, a commodities economist at National Australia Bank. This has “led to sell-offs.” According to US government data Wednesday, diesel and heating oil stocks were at their highest level since January 1983.

Fresh data to be released in the middle of this week are expected to show a sizable supply surplus of oil products, Jim Ritterbusch of Ritterbusch and Associates said in a note. “”We still view domestic petroleum balances as deserving of lower price levels, with the $65 area still providing a reasonable downside target.”

More US economic data are expected throughout this week that may sway crude oil price direction. These include August retail sales Tuesday, August Consumer Price Index and industrial production Wednesday and housing starts and jobless claims Thursday.

Positive news on the economic outlook during US President Barack Obama’s speech at New York’s Federal Hall, at 12:10 EDT Monday, may also provide some upward pressure for Nymex crude oil, Westmore said.

Tags:  crude oil futures, oil prices, US dollar