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OIL FUTURES: Crude Flat in Asia; Investors on Sidelines Ahead of US Election

Published: November 6, 2012 | 9:19 am
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Crude-oil futures were flat in rangebound Asian trade Tuesday as most market participants stood on the sidelines ahead of the closely contested U.S. presidential election.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at $85.69 a barrel at 0701 GMT, up $0.04 in the Globex electronic session. December Brent crude on London’s ICE Futures exchange rose $0.08 to $107.81 a barrel.

The U.S. presidential election will likely generate volatility in oil prices as traders attempt to project longer-term energy policy initiatives from the results, Jim Ritterbusch, president of Ritterbusch & Associates, said in a research note late Monday. All products of the energy complex will likely decline by 5%-6% over the following 7-10 days, Mr. Ritterbusch said, with the U.S. benchmark falling to around $81/barrel and Brent crude sliding to around $101/bbl.

Crude-oil prices could react to any movements in the U.S. dollar versus the euro that are prompted by election news, a Tokyo-based trader said. Crude oil, which is traded in dollars, often moves inversely to the dollar because a stronger dollar makes crude more expensive to holders of other currencies.

Other political developments in focus this week will include China’s 18th Party Congress, which kicks off Thursday. It could offer clues to whether policy makers are prepared to take additional steps to boost growth in the world’s second-largest economy, traders said. Meanwhile, Greece’s parliament is set to vote on an austerity bill Wednesday and take up the nation’s 2013 budget over the weekend.

The differential between Brent and West Texas Intermediate crudes will likely average $20 a barrel in the fourth quarter of this year, Morgan Stanley said in a research note late Monday, revising its previous forecast of $17.50 a barrel due to refinery outages and delays in deliveries of Brent from the North Sea.

Nymex reformulated gasoline blendstock for December–the benchmark gasoline contract–rose 126 points to $2.6328 a gallon, while December heating oil traded at $2.9842, 13 points higher.

ICE gasoil for November changed hands at $933.25 a metric ton, up $10.75 from Monday’s settlement.

Write to Surabhi Sahu at surabhi.sahu@dowjones.com

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