Brent oil trading near $78 as Dollar Index moves higher

Brent oil futures open Friday’s trading session lower in the $77 to $78 range as the US Dollar Index moves higher and may test Brent’s support levels.

In London, Brent crude oil futures for November 2010 delivery was trading at $77.71, 08.00 GMT on the ICE Futures Exchange after closing off below $78 in trading on Thursday.

The ICE Dollar Index, which tracks the US dollar against a trade weighted basket of currencies including the yen, was at 80.138 compared with 80.099.

The US dollar is probably higher this morning as Japanese banks are buying a lot of US dollars against the yen in an attempt to weaken the yen on foreign exchange markets.

“The price action is very specific and strange,” bearing the marks of government intervention, said Minoru Shioiri, chief manager of foreign exchange trading at Mitsubishi UFJ Morgan Stanley Securities.

Brent Oil Futures – Trading Support Level

The US dollar is trading close to it’s lowest level in six months using the US Dollar Index stats and tracking the index could shed some light on Brent oil futures support levels.

Brent oil prices have dipped below the $70 mark only twice in 2010 and for only brief periods, hence a support level for Brent on the lower side would be seen around the $76 mark.

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