Crude oil futures for June delivery slumped to the low of $112.02 a barrel and currently hovering around those levels, down more than 1.50%, and leaving the intraday high at $114.11 a barrel.
The market woke up to the news from the United States as President Obama said that US forces had killed Osama Bin Laden was killed in Pakistan on Sunday during a firefight in Abbottabad. The news sent a shock wave into the market and supported the dollar strongly as investors played down the risk facing the United States and the risk over the political situation and possible end of war for the US for now.
Indices in slim holiday Asian trading moved higher on the news and Nikkei Average added 1.4% today. The dollar index moved higher to compensate for the recent losses that drove the dollar to a three-year low. The index recovered from the opening low of 72.80 to the high of 73.28 and currently trading around 73.17 areas with bullish tendencies.
Oil was also pressured by signs of weakening growth amid high prices, where China’s downbeat figures intensified the decline. China’s manufacturing PMI dropped more than forecasts in April to 52.9 from 53.4 below the expected 53.9.
Crude’s downside pressures are building up and the news of Bin Laden’s death only added to the bearishness. The market was already pressured by the news over the weekend that NATO forces airstrikes killed Libyan leader Muammar Gaddafi’s youngest sons and his three children according to the Libyan government which investors saw as more pressure on the regime to step down and end the conflict.
More pressures was from news from the Saudi-based industry according to “Reuters” that said Saudi Arabia increased crude oil output in April to around 8.5 million barrels per day from about 8.3 million barrels per day.
Pressures are growing in the market and the correction was also needed for crude, while the week’s heavy economic fundamentals will be more volatility for the market starting with manufacturing and services data moving to rate decisions and ending with Friday’s infamous payrolls from the United States and accordingly the volatility is merely to be the title for this week.