Oil prices sink as euro tumbles
Wednesday, 2 June 2010
LONDON, April 1 (AFP): Crude-oil futures tumbled Tuesday, falling more than $2 a barrel, as anxiety over the euro zone grew and investors fled riskier assets in favour of the dollar.
A stronger dollar against the euro and other currencies weighs on oil prices as it makes the commodity much more expensive to buy for holders of other currencies.
Traders returned to their desks Tuesday after public holidays in the US and U.K. which limited participation Monday and "the dollar index jumped," pushing oil prices sharply lower, said Hudson Capital trader, Clarence Chu.
The front-month July contract on the New York Mercantile Exchange was $2.05 cents lower at $71.92 a barrel. The front-month July Brent contract on London's ICE futures exchange was down $2.68 at $71.97 a barrel.
A maelstrom of news events are causing extreme volatility for foreign-exchange markets, with oil expected to take its cues from dollar moves in the sessions ahead.
The euro is trading near a four-year low against the dollar, under pressure after the downgrade of Spain's sovereign-debt, and the European Central Bank's estimate of bank losses.
ECB board member Christian Noyer, speaking in Seoul, said responses by central banks to recent financial crises have been broadly successful.
However, he warned that "steering the economy may prove more challenging and new risks can weigh negatively on the recovery underway. Reports of a delay in Argentina debt restructuring are also adding to concern in the bond markets.
"The markets are still prone to a broad-based setback, particularly the US stock market, which is still nervous about Europe, and has yet to fully discount how severe the euro-induced slowdown could potentially be," said Ed Meir, senior commodity analyst at MF Global.
"We simply have not had enough time for the recent currency crisis to fully manifest itself in the European macro-economic data."
A stronger dollar against the euro and other currencies weighs on oil prices as it makes the commodity much more expensive to buy for holders of other currencies.
Traders returned to their desks Tuesday after public holidays in the US and U.K. which limited participation Monday and "the dollar index jumped," pushing oil prices sharply lower, said Hudson Capital trader, Clarence Chu.
The front-month July contract on the New York Mercantile Exchange was $2.05 cents lower at $71.92 a barrel. The front-month July Brent contract on London's ICE futures exchange was down $2.68 at $71.97 a barrel.
A maelstrom of news events are causing extreme volatility for foreign-exchange markets, with oil expected to take its cues from dollar moves in the sessions ahead.
The euro is trading near a four-year low against the dollar, under pressure after the downgrade of Spain's sovereign-debt, and the European Central Bank's estimate of bank losses.
ECB board member Christian Noyer, speaking in Seoul, said responses by central banks to recent financial crises have been broadly successful.
However, he warned that "steering the economy may prove more challenging and new risks can weigh negatively on the recovery underway. Reports of a delay in Argentina debt restructuring are also adding to concern in the bond markets.
"The markets are still prone to a broad-based setback, particularly the US stock market, which is still nervous about Europe, and has yet to fully discount how severe the euro-induced slowdown could potentially be," said Ed Meir, senior commodity analyst at MF Global.
"We simply have not had enough time for the recent currency crisis to fully manifest itself in the European macro-economic data."