Futures fell after the Bank of Korea raised interest rates for the second time this year. A newspaper report said China will take further steps to control price increases. The dollar traded near the highest in more than a month versus the euro, limiting investor demand for commodities.
“Strategies by China to restrict financing are making some financial markets decline,” said Ken Hasegawa, a commodity derivative sales manager at Newedge Group in Tokyo. “We need more time to see $90 a barrel crude oil, maybe next year. There are some factors of concern on European economies.”
The December crude contract dropped as much as 62 cents, or 0.7 percent, to $84.24 a barrel, in electronic trading on the New York Mercantile Exchange and was at $84.70 at 1:25 p.m. Singapore time. Yesterday, it lost 2 cents to $84.86 after rising as much as 89 cents. Prices are up 6.7 percent this year.
The Bank of Korea increased interest rates after inflation surged past the central bank’s ceiling. China will introduce measures to control rising food prices, including limits on how much products may be sold for and subsidies, the China Securities Journal reported, citing an unidentified person. The country’s central bank boosted lending rates in October for the first time since 2007.
Europe’s Debt
Crude also dropped after the dollar traded at the strongest against the euro since Sept. 30. Irish Prime Minister Brian Cowen signaled his government will talk with the region’s finance ministers today on ways to help his country’s banking system and stop Europe’s debt crisis from worsening.
“There’s still a sense of pessimism out there,” Davis Taylor, a market analyst at CMC Markets Ltd. in Sydney, said in a note today. There are “concerns over Ireland’s sovereign debt, worries over future rate rises in China and the health of the U.S. economy.”
The dollar was at $1.3645 per euro after earlier rising as high as $1.3561. A stronger U.S. currency curbs investor demand for raw materials.
An Energy Department report tomorrow may show U.S. crude stockpiles fell 700,000 barrels last week from 364.9 million barrels, according to the median of nine analyst estimates surveyed by Bloomberg News. Fuel supplies also decreased, the analysts said in the survey.
Brent crude for January settlement lost as much as 39 cents, or 0.5 percent, to $86.37 a barrel on the ICE Futures Europe exchange in London. The contract traded at $86.52 a barrel.
