U.S. crude oil ended sharply lower on Monday, with the dollar strengthening against a select band of currencies and with Iraq also lowering its price for U.S. buyers.
Oil prices came under added pressure after the Organization of the Petroleum Exporting Countries indicated it would not resort to production cuts to lift prices.
OPEC Secretary General Abdullah al-Badri speaking at an industry conference in Abu Dhabi said there was no need to panic over the low prices and that the situation would resolve by itself.
Meanwhile, data out of China showed inflation to have remained unchanged near a 5-year low in October while exports grew at a slower pace from last year, reinforcing signs of weak economic activity. China is the second biggest energy consumer in the world.
Earlier in the day, crude prices trended higher amid renewed worries over the conflict in eastern Ukraine.
According to reports, heavy fighting took place between pro-Russian rebels and Ukrainian forces in the Donetsk region over the weekend. Reports indicate a convoy of 21 trucks, six tanks and over a dozen howitzer cannons were driven to Donetsk on Monday.
Light Sweet Crude Oil futures for December delivery, the most actively traded contract, jumped $1.25 or 1.6 percent to close at $77.40 a barrel on the New York Mercantile Exchange Monday.
Crude prices for December delivery scaled a high of $79.85 a barrel intraday and a low of $77.31.
On Friday, crude oil futures ended higher on Friday, on a strong dollar after some soft jobs data from the U.S. showed the economy to have created fewer jobs in October than expected, despite a decline in unemployment rate.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 87.80 on Monday, up from its previous close of 87.51 late Friday in North American trade. The dollar scaled a high of 87.78 intraday and a low of 87.22.
The euro trended lower against the dollar at $1.2425 on Monday, as compared to its previous close of $1.2473 late Friday in North American trade. The euro scaled a high of $1.2510 intraday and a low of $1.2420.
In economic news, data out of China showed exports were up 11.6 percent in October from a year earlier, beating expectations. However, that was down from a 15.3 percent growth seen in September. Crude oil imports surged up 18 percent in October, after rising 7.4 percent in the preceding month.
Chinese imports rose 4.6 percent from a year earlier, slightly below forecasts calling for a five per cent gain.
China’s Inflation held steady at 1.6 percent in October, which was the lowest rate seen since January 2010, the National Bureau of Statistics reported Monday. The rate was in line with economists’ expectations.
In economic news from the eurozone, investor confidence rose for the first time since July, survey figures from the think-tank Sentix showed. The investor sentiment index rose to -11.9 in November from a 17-month low of -13.7 score seen in October.
Although the assessment of the current situation deteriorated further, 6-month expectations improved for the first time this year in November.
The economic calendar is relatively thin this week, with focus primarily on the U.S. Commerce Department’s retail sales report for October, the preliminary reading based on the consumer sentiment survey by Reuters and the University of Michigan, the weekly jobless claims report and some Fed speeches.
The Commerce Department’s wholesale and business inventories reports for September, the Labor Department’s import and export prices data for October are some of the other data due this week.
The material has been provided by InstaForex Company – www.instaforex.com