Crude Oil Tumbles As Traders Book Profits

                      Crude oil is trading at 106.68 easing by 86 cents this morning, while Brent oil is trading at 110.80 down by 93 cents. Oil prices falls were limited by the severe drop in the US dollar which fell hard after FOMC member Larry Summers withdrew his nomination for Mr. Bernanke’s position as Director of the Federal Reserve, when Mr. Bernanke steps down in January 2014. Crude oil prices settled marginally lower on Friday on the back of a stronger dollar. Meanwhile, some profit booking also weighed on the prices as WTI and Brent gained 1% in the previous trading session. WTI crude capped its biggest weekly drop since July. Energy saw their biggest declines early in the week as an agreement appeared to emerge that would avert—or at least delay—a U.S. strike on the Syrian government in retaliation for its use of chemical weapons. Syria is only a minor oil producer, but investors have worried that conflict in the region would set off a chain reaction of turmoil elsewhere and disrupt more significant production centers—much as the “Arab Spring” uprising that began in Tunisia eventually led to a sharp decline in Libyan production. As the prospect of an attack on Syria faded, oil prices fell from the two-year high they had reached on the previous Friday. Another factor boosting sentiment may have been investors’ increasing comfort level with potential changes in monetary policy emerging from the Federal Open Market Committee meeting on September 17 and 18. Many economists expect that policymakers will decide to reduce the pace of the Fed’s purchases of long-term bonds, which have helped keep long-term interest rates very low even as economic prospects have improved. Improving conditions in both the housing and labor markets, and new found strength in U.S. manufacturing and energy production, should provide support for commodities over the longer term.

Natural gas is trading at 3.687 up by 11 points this morning. Natural gas futures ended higher on Friday, backed by this week’s supportive inventory report and expectations for a light build next week, but the upside was limited by the milder weather expected next week which should slow demand. On a weekly basis, Nymex natural gas prices gained by more than 4 percent on account of less than expected rise in US natural gas inventories. Further, weakness in the DX supported an upside in prices. Gas prices touched a weekly high of 3.689 and closed at 3.676 in last trade of the week. Large-scale gas exports from the United States will narrow the gap between U.S. domestic prices and those in Asia, but the boost to U.S. domestic gas prices is likely to be smaller than U.S. gas producer’s hope and consumers fear. - FxEmpire.com