Crude oil continues downward journey, falls on weak euro zone retail sales, strong dollar

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Crude oil prices continued its downward journey, falling for the third day on Thursday at the domestic markets after retail sales in the euro zone fell significantly more-than-expected in October, adding to concerns over the region's economic outlook which dampened the demand outlook for the fuel. Eurostat said retail sales dropped by a seasonally adjusted 1.2 per cent in October, compared to expectations for a 0.1 per cent decline. At the MCX, crude oil futures for December 2012 contract were trading at Rs. 4,800 per barrel, down by 0.35 per cent, after opening at Rs. 4,810 against the previous closing price of Rs. 4,817. It touched the intra-day low of Rs. 4,795 till the trading. (At 11.14 AM today).

Sentiment weakened further as a slowdown in the US job market also darkened the demand outlook for the fuel, adding to selling pressure. American companies added 118,000 workers last month, down from the 157,000 added in October as hiring slowed amid an uncertain economic outlook, ADP said.

Prices also fell after data showed that gasoline stockpiles surged by 7.86 million barrels last week, the most since September 2001, signaling weakening fuel demand in the world's largest fuel consuming nation.

Moreover, a stronger dollar makes crude oil expensive for those holding other currencies, thus reducing demand. The U.S. dollar index, a measure of the value of the United States dollar relative to a basket of foreign currencies, was trading 0.15 per cent higher at 79.894 on the Inter-Continental Exchange (ICE) at 11.16 am IST.

However, losses in the fuel were curbed after Energy Information Administration said that U.S. Crude Oil Inventories fell to a seasonally adjusted annual rate of -2.357M, from -0.347M in the preceding month indicating that the demand for the commodity in the world's largest consumer of crude oil remains strong.

Story first published: Thursday, December 6, 2012, 16:30 [IST]
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