Oil prices declined Monday in electronic trade, a lower start for a week packed with closely watched economic data and a statement on monetary policy from the U.S. Federal Reserve.
Crude oil for September delivery fell 53 cents, or 0.5%, to $104.18 a barrel. The contract on Friday fell 79 cents to $104.70 a barrel on the New York Mercantile Exchange.
Oil prices on Monday didn’t find support from a pullback in the U.S. dollar against major rivals nor from an acceleration of violence in Egypt over the weekend. A weaker dollar tends to encourage buying of oil and other dollar-denominated commodities as it makes them less expensive for users of other currencies.
In Egypt, at least 74 people were killed in clashes between security forces and supporters of ousted President Mohammed Morsi. While Egypt isn’t a major oil producer, deadly violence and political instability has raised concerns about Egypt’s Suez Canal, a major shipping route for Middle East crude.
Before last week’s loss, oil futures over the previous four weeks had jumped about 15%, with worries about the Middle East and supply disruptions in Nigeria and Iraq having served as upside drivers.
“Generally, short-term supply issues and geopolitics are holding up oil prices but the outlook for medium-term demand and supply invites caution,” analysts at Charles Stanley said in a report Friday. “Although oil prices have bubbled up, with non-OPEC supply growth running at a good pace and softer global demand, we could be in for a period of weaker prices in the second half of 2013 and beyond.”
Energy investors have a busy week of economic updates to consider, including the first look at second-quarter growth in the U.S. and more manufacturing data from China for July. Last week, oil prices suffered their first weekly loss in five weeks after HSBC data showed manufacturing activity in China fell to an 11-month low in July.
Monetary policy statements are due Thursday from the European Central Bank and the Bank of England, preceded by the Fed’s statement on Wednesday. The markets will watch for any language from the Fed that hints at the timing of when the central bank will start tapering monetary stimulus. Its bond-buying program, part of a strategy to encourage economic growth, currently runs at $85 billion a month.
Highly anticipated jobs data from the U.S. Labor Department is due Friday. The report is currently expected to show the U.S. economy created 175,000 jobs in July and that the unemployment rate dipped to 7.5% from 7.6%, according to economists polled by MarketWatch.
The Fed has said labor-market conditions are a major component in its assessment of whether to slow the pace of stimulus efforts.
Elsewhere Monday, August gasoline was unchanged at $3.04 a gallon and remained at $3.01 a gallon after falling 2.6% last week.
August natural gas lost 7 cents, or 2%, to $3.49 per million British thermal units, extending last week’s decline of about 5%. The August contract will expire after the close of floor trading in New York later Monday.
The September contract for natural gas fell 7 cents to $3.49 per million British thermal units in electronic trade.
Source : Marketwatch
