Brent oil trading under $84, US dollar still remains weak

8 October 2010 8 October 2010

BonTrade

Brent oil futures are trading back under $84 a barrel on Friday as prices fell over two percent in trading yesterday and the US dollar still remains weak against most other major currencies.

In London, Brent crude oil futures for November 2010 delivery was trading at $83.52 a barrel, 08.00 GMT on the ICE Futures Exchange.

Meanwhile, the ICE Dollar Index, which tracks the US dollar against a trade weighted basket of major currencies, was at 77.308 from 77.464, near 2010 lows. The Index, at nearly 87.00 in June was flat in Thursday’s trading, up only 0.02 percent.

Stock Markets Still Affecting Oil Prices

Without strength in global stock markets, analysts say that crude oil will have trouble supporting higher prices on the strength of its own market fundamentals.

European and US stock markets ended Thursday’s session lower, however China’s key stock market closed up over three percent today, its highest level since early May 2010 after the week long Chinese National Day holiday, catching up with firmer global markets and as stronger oil prices bolstered metals and mining issues.

“Oil’s movement is based on the US dollar now. If you only look at the fundamental side, crude oil prices are overvalued. It will take further depreciation of the US dollar for oil bulls to target the mid $80’s again.” said Ben Westmore, minerals and energy economist at National Australia Bank.