LONDON, Oct 30 — Oil prices eased further below US$80 (RM272) a barrel today following a 3 per cent jump the previous day as a stronger dollar and doubts that oil prices may have run ahead of supply and demand fundamentals weighed.
Oil prices jumped yesterday, and US stocks logged their best one-day percentage gain in three months, as investors saw data showing the US economy returned to growth in the third quarter as brightening the outlook for profits and oil demand.
US crude for December delivery fell 85 cents to US$79.02 a barrel by 1312 GMT (9.12pm Malaysian time), after trading above the key US$80 a barrel level in early trade. London Brent crude slipped US$1 to US$77.04.
Yesterday’s sharp rise crowned October gains, setting crude on course for a 12 per cent rise this month, after a broadly positive corporate earnings season prompted many investors to bet on further oil price rises.
“There is some weakness after Thursday’s exuberance over GDP data in light of today’s report on the stressed consumer,” said John Kilduff, co-chief investment officer and partner at hedge fund Round Earth Capital.
US consumer spending fell in September for the first time in five months.
Strength in the dollar also contributed to oil’s losses today, analysts said.
Oil prices tend to fall when the dollar rises as it makes the dollar-denominated commodity more expensive for holders of other currencies.
Exxon Mobil Corp, Royal Dutch Shell Plc and Eni SpA dashed hopes for an imminent turnaround for the oil industry yesterday, saying sluggish economic recovery was weighing on energy demand and prices.
Chevron Corp also posted a 51 per cent drop in quarterly profit today.
Bearish comments from oil firms followed data on Wednesday showing a surprise build in US gasoline inventories.
Global oil product stocks stored at sea are also brimming, with floating storage estimates near 80 million barrels.
Analysts said traders were awaiting more US economic data today to gauge if the pace of recovery in the world’s largest fuel consumer is sustainable.
Today’s data includes the University of Michigan consumer sentiment survey for October and the Institute of Supply Management Chicago’s October index for manufacturing activity.— Reuters
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