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Crude oil futures top USD87 a barrel on broad dollar weakness

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Forexpros - Crude oil futures extended gains in choppy trade on Monday, as the U.S. dollar fell to fresh session lows following downbeat data on manufacturing activity in the New York region and a report showing foreigners were net sellers of U.S. assets in June.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at USD87.20 a barrel during U.S. morning trade, surging 1.75%.

It earlier rose as much as 2.03% to trade at a daily high of USD87.35 a barrel.

The U.S. dollar slumped to a one-week low against the euro, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.88% to hit 74.05, the lowest since August 10.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

The greenback's losses came after official data showed that an index of manufacturing conditions in New York State fell by 3.9 points to minus 7.7 in August from minus 3.8 in July.

Analysts had expected the index to improve to minus 0.4 in August.

A separate report showed that net foreign purchases of long-term U.S. securities totaled USD3.7 billion in June, significantly below expectations of USD30.1 billion.

Meanwhile, crude prices found further support after data released earlier showed that Japan's economy contracted less-than-expected in the second quarter, signaling the country is rebounding from March's earthquake disaster at a faster rate than expected.

Japan's gross domestic shrank by 0.3% in the second quarter, or 1.3% on an annualized basis. Analysts had expected Japan's economy to contract by 0.9% in the quarter, or 2.5% on an annualized basis.

Japan is the world's third largest crude oil consumer, after the U.S. and China.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery rose 1.2% to trade at USD108.91 a barrel, up USD21.71 on its U.S. counterpart.

Global financial service provider Barclays said earlier it left unchanged its forecast that Brent will average USD110 a barrel in the third quarter of this year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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