Oil eases from high, risk appetite to support
Oil eased from a two-year high, but losses were limited by the new round of US economic stimulus
Oil eased from a two-year high, but losses were limited by the new round of US economic stimulus
Investor appetite for risk is expected to continue grinding down the low-yielding dollar after the US Federal Reserve’s commitment this week to open-ended purchases of Treasuries renewed the focus on the dollar as a funding currency.
“The issue that we have to look at is the financial side and the injection of money,” said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.
The dollar was mired near 11-month lows against a basket of currencies. A declining dollar boosts the appeal of commodities as a way to preserve value.
The Reuters-Jefferies CRB index, a global commodities benchmark, rose above 312 points on Thursday to its highest since October 2008.
Gold, a traditional haven for investors shunning dollars and hedging against inflation, was above $1,380 an ounce, just below a record high of above $1,390 an ounce.
Later, the market focus will shift to a monthly US jobs report. Employment probably increased in October for the first time since May, a Reuters survey showed.
European shares dipped as investors took profit from six-month highs hit earlier on Friday ahead of the jobs data.
The price of oil has recovered almost half the ground lost between a mid-2008 record high and the low at the deepest point of the recession.
It was approaching the top of a $70-$90 price range, which Saudi Arabia’s oil minister Ali al-Naimi earlier this week said was acceptable to both producers and consumers.
But some analysts pointed out oil’s fundamentals have not recovered to the levels seen before the financial crisis in 2008.
However, some analysts cautioned whether the rally in oil prices would be sustainable.
“Although we are up again as of this writing in a number of commodity markets, including energy, we have trouble seeing how much longer the current run can extend to, given that at some point, higher commodity prices will lead to even higher inflation and interest rates in emerging countries,” MF Global said in its research note.
“Over the last few weeks, we have seen many Asian economies raise rates already, and there is talk that China may be poised to move again.”
