Oil traded close to a six-week low, heading for a second weekly decline, on concern that oil demand will shrink in the U.S. and Europe.
Futures closed down 1.1 percent yesterday after reports showed U.S. industrial production shrank for the first time since April and European factory output contracted, potentially curbing oil use. Crude oil may fall next week, a Bloomberg News survey showed.
“The outlook for U.S. oil demand remains bleak,” David Wech, head of research at Vienna-based consultant JBC Energy GmbH, said in a note today. “The feeble recovery is at risk from Europe’s looming recession.”
Crude for January delivery added 0.2 percent to $94.04 a barrel in electronic trading on the New York Mercantile Exchange at 10:37 a.m. London time. The contract yesterday declined to $93.87, the lowest close since Nov. 2. Futures are up 2.7 percent this year.
Brent oil for February settlement was at $103.63 a barrel, up 3 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate for the same month was at $9.83, compared with a record $27.88 on Oct. 14.
Oil tumbled 5.6 percent in New York this week, the most since September, after the Organization of Petroleum Exporting Countries agreed to raise its production ceiling and the International Energy Agency cut its demand forecast, partly because of concern about the sovereign debt crisis in Europe.
.......................................................................
Rupee Jumps Most Since May 2010 on Central Bank’s Move to Curb Speculation
India’s rupee surged the most in 19 months, extending its rebound from an all-time low reached yesterday, after the central bank announced measures to curb speculation in the foreign-exchange market.
The currency, this year’s worst performer in the region, strengthened the most among Asian currencies after the Reserve Bank of India said companies can’t enter into multiple forward contracts to cover a single overseas transaction. It pared gains as the monetary authority, which has raised interest rates 13 times since the start of 2010 to cool inflation, kept them unchanged at a policy review in Mumbai today.
“The RBI has taken decisive measures to reduce onshore speculation against the rupee,” said Olivier Desbarres, head of foreign-exchange strategy for the region at Barclays Capital in Singapore. “These measures have certainly caught the market’s attention and it reduces the chances of a rapid weakening of the rupee.”
The rupee jumped 1.7 percent to 52.7450 per dollar in Mumbai, the biggest gain since May 2010, according to data compiled by Bloomberg. It rose as much as 2.7 percent earlier. The currency, which fell to an all-time low of 54.3050 yesterday, has lost 1.3 percent this week and 15.2 percent in 2011.
The new rule applies to domestic as well as foreign investors and takes effect immediately, according to a central bank statement published after the market closed yesterday. Forwards are agreements to buy or sell assets at a set price and date. The RBI also said it will reduce the amount of open positions dealers can maintain overnight.
