Brent oil trading higher, nearer $76 on a stronger Euro

16 August 2010 16 August 2010

BonTrade

Brent oil prices open the week’s trading higher, nearer to the $76 mark as the Euro gained some strength against the US dollar.

In London, Brent crude oil futures for September 2010 delivery was trading at $75.52, 08.00 GMT on the ICE Futures Exchange after a miserable close last week saw over $5 shaved off Brent prices.

The Euro rebounded from a three week low against the US dollar this morning, after sliding last week as worries over prospects of slowing global growth increased demand for traditional safe haven currencies.

Meanwhile, Deutsche Bank has suggested that there is likely to be some negative sentiment for oil prices in the third quarter of 2010 as Chinese tightening measures play out with a possible deceleration in oil demand growth rates.

Chinese total apparent oil demand fell in July by around 10% in month on month terms, however the figures still represent a gain of 2% in year on year terms.

Also, China, whose $2.45 trillion in foreign exchange reserves are the world’s largest, is turning bullish on Europe and Japan and has been buying quite a lot of European bonds, said Yu Yongding, a former adviser to the People’s Bank of China.

Oil demand and currency movements are having a downward effect on Brent oil prices and the latest estimates and market movements may put the brakes back on any big rises in the short term at least.