LONDON: Brent crude traded at its lowest in three weeks after dropping below $100 yesterday as the dollar firmed and investors worried that a credit squeeze could dampen growth in China, the world’s biggest energy user.
It tumbled nearly five percent last week in its biggest weekly drop since early April after US Federal Reserve Chairman Ben Bernanke laid out a strategy for paring monetary stimulus, broadly sapping demand for commodities.
“The US Fed announcement has definitely changed the market sentiment for most global risk asset markets,” said Dominick Chirichella of Energy Management Institute.
“On top of the concerns coming from the potential change in monetary policies in the developed world, China’s worst cash crunch in the last 10 years is raising a new level of uncertainty in the world’s main oil demand growth engine.”
Brent crude was off 71 cents at $100.20 by 1332 GMT, after falling to $99.82, its weakest since June 3. US oil slipped 37 cents to $92.32 a barrel.
The stronger dollar hurts commodities priced in the greenback, including copper and gold, by making them more expensive for holders of other currencies.
US oil is expected to revisit its April 18 low of $85.61 a barrel over the next three months, with a good chance of dropping through this level towards its June 28, 2012 trough of $77.28, according market analyst Wang Tao.
Reuters
