Crude oil falls on dollar, to trade with negative bias

Crude oil prices felt selling pressure on Thursday as a stronger dollar lowered the appeal of the commodity. Oil prices lost 2.7% yesterday on concern that demand is weak as refining rates in the US dropped and equity markets declined. Risk aversion also led to lower demand for higher-yielding and riskier investment assets.

Oil prices have risen 74% this year but it fell yesterday as investors closed off positions before the end of the year. US refinery utilization rates fell for the third consecutive week to 79.4% last week.

Refineries are running at a low rate in the export markets like Korea, Taiwan, Singapore and that indicated that demand globally is weak.

But the OECD has doubled its growth forecast for the leading developed economic next year and predicted a further acceleration in 2011 as China power a global recovery.

Nymex Natural Gas December prices ended in the positive territory on Thursday to close at $4.346/mmbtu mark.

Oil prices could continue to trade with a negative bias as even slight strength in the dollar could exert selling pressure. There is no economic data from the US today and oil prices could continue to take cues from the dollar. Demand concerns in the oil market will also act as a bearish factor.

Lower refinery rates indicate that the demand scenario is still bleak and prospects for the economic recovery are also mixed. There are two extreme views over the economic recovery in the financial markets and that is also leading to mixed sentiments. Overall, the price rally in oil in the last few weeks was far outpaced and the selling pressure at higher levels was inevitable.

Today, we could witness sideways move in crude oil prices with support for NYMEX December Crude Oil is seen at $76.65/$75.45 level & resistance at $79.45/$81.05 levels.

Natural gas price will take cues from oil prices. Natural gas MCX November contract has major support at Rs. 190 & resistance at Rs.208 levels.

Courtesy: Angel Commodities

Want to get Futures prices on your mobile? Click here