Oil falls toward $80 on dollar, housing data

Author: 
REUTERS
Publication Date: 
Thu, 2010-03-04 22:35

The euro fell versus the dollar on Thursday as comments by the European Central Bank reinforced the view interest rates in the region will remain low in the foreseeable future.
A stronger dollar tends to pressure oil because it makes dollar-denominated commodities more expensive for other currency holders.
Meanwhile, pending sales of existing US homes fell more than expected in January, according to the National Association of Realtors, casting a shadow over some earlier positive economic data in the world's largest energy consumer.
The market is awaiting key US non-farm payroll data on Friday at 8:30 a.m. EST (1330 GMT).
Benchmark US crude oil futures for April fell 55 cents to $80.32 per barrel by 12:20 p.m. EST (1720 GMT). The contract reached a peak of $81.23 on Wednesday, its highest intraday point since Jan. 12. London ICE Brent for April was down 52 cents at $78.73.
"The market was not responding well to the positive economic reports. Now home sales data is weighing. Once again the market is in $80/$81 range and can't sustain a rally," said Tom Bentz, broker at BNP Paribas Commodity Futures Inc in New York.
Crude oil prices have been trading in a tight range between $78 and $81 a barrel in recent days, balking when prices try to make a break to the upside.
Earlier, data showed that US jobs claims fell last week, the Labor Department said on Thursday. A separate report from the Commerce Department showed orders received by US factories rose 1.7 percent in January after a 1.5 percent increase in December.
Reports of an attack on an oil facility in Nigeria gave some support to prices, raising worries over production from the Niger Delta after a period of relative calm.
A militant faction in Nigeria's restive Niger Delta said it blew up an oil manifold operated by Italy's Agip on Wednesday.
There was no immediate independent confirmation.
The attack would be the second in as many days in the Delta, where an amnesty program last year brought more than six months of peace.
Rising stocks
China Investment Corp, the country's sovereign wealth fund, believes commodity prices are outpacing the global economic recovery, fueled by loose monetary policies, a top official said on Thursday.
"Personally, I think the prices are a bit too high, relative to the strength of real economic recovery," Jesse Wang, CIC executive vice president and chief risk officer, said on the sidelines of a conference in Beijing.
However, the latest data from the Joint Oil Data Initiative (JODI) implies Asian demand has been growing by more than 2 million barrels per day from a year earlier, according to Barclays.
"If Asian demand can grow at such rapid rates when prices are in the $70 to $80 range, then prices cannot stay in that range for much longer," Barclays analysts headed by Paul Horsnell said.
A potentially bearish sign for crude demand came on Wednesday when the Energy Information Administration said US crude inventories last week rose by a larger-than-expected 4.1 million barrels, while gasoline stocks also increased, raising questions about US energy demand.
Balancing those figures were data showing total US oil demand grew 0.3 percent in the past four weeks from a year earlier, raising expectations for an end to a 1-1/2 year period of sustained consumption decreases.

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