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Oil Falls to $81 on Dollar - ASHARQ AL-AWSAT English Archive
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LONDON (Reuters) – Oil fell toward $81 a barrel on Friday on a stronger dollar and signs that U.S. economic growth was slack in the third quarter, leaving expectations for monetary easing from the U.S. Federal Reserve unchanged.

U.S. economic growth likely edged up 2 percent in the third quarter but was not seen as strong enough to erode high unemployment or change perceptions of more monetary easing from the Federal Reserve next week.

The dollar rose around 0.6 percent in a move that dampened the appeal of commodities such as oil for both buyers holding other currencies and investors looking for a hedge against cash.

U.S. crude for December fell 83 cents to $81.35 by 0955 GMT, after edging up slightly the previous day.

ICE Brent fell 61 cents to $82.98 a barrel.

“I think it’s the usual suspect: a stronger U.S. dollar,” said oil analyst Carsten Fritsch at Commerzbank. “We’re range-bound between $80-$83 and that is likely to continue until at least the Fed meeting next week: that will be the watershed for the market.”

The U.S. Federal Reserve is expected to announce a second round of easing after its policy setting committee meets on November 2-3.

SLUGGISH GROWTH

Disappointing data out of Germany, Europe’s largest economy, also weighed on oil after the country’s retail sales posted their biggest monthly drop in 2-1/2 years in September.

European shares fell slightly early on Friday.

New claims for U.S. unemployment benefits unexpectedly fell to a three-month low last week data showed on Thursday, but the underlying trend still points to labor market stagnation.

“People are very worried about a slowdown in economic growth,” said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd. “Industrial production in some countries is quite weak.”

Still, $80 a barrel is expected to hold as the market floor, at least in the medium term.

“We think that oil prices have formed a firm base above the $80 mark with the likelihood of a sharp correction below $80 easing for the remainder of this year,” said Stefan Graber, a commodities analyst with Credit Suisse in Singapore.

The French strike showed further signs of waning on Friday and workers at the key northern oil port of Le Havre voted to return to work, with Exxon Mobil resuming pumping crude oil to its Port-Jerome refinery.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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