Crude oil prices trading under $81 eyes on Fed, US dollar

15 March 2010 15 March 2010

BonTrade

Light crude oil prices fell below $81 a barrel in trading on Monday, extending Friday’s losses, pressured by a stronger US dollar which rose broadly today as investors took refuge in its safe haven status after fears of more liquidity tightening measures by China’s central bank pummeled Asian stocks.

US Light crude oil futures for April delivery had fallen 51 cents to $80.73 per barrel in light trading.

“The market will await further clues on demand outlook from the Fed’s rate decision on Wednesday.” said Ben Westmore, commodities analyst at the National Australia Bank in Melbourne.

The US Fed is expected to hold benchmark rates near zero and reiterate its pledge to keep them low for an “extended period,” due to lingering weakness in the US jobs market and nagging doubts over the solidity of the economic rebound.

The US dollar gained on Monday as a drop in Asian stocks prompted some investors to shy away from riskier assets such as the euro and sterling, which have been hit by sovereign debt concerns.

Money managers increased their net long Light crude oil futures position on the NYMEX in the week through March 9, the CFTC had said last Friday.