Brent Tumbles As Dollar Climbs
Brent crude oil was poised to end the week on a low after falling to a four month low on Thursday following the first day of talks between the West and Iran.
The commodity traded at $103.57 at 6:32 GMT as an oversupplied market and a strong dollar continued to pressure prices.
The European Central Bank surprised markets by cutting its main interest rate to a record low 0.25 percent, which helped buoy the dollar. Adding to the dollar's strength was a statement from the US Department of Commerce which said the nation's economic growth had increased more than expected in the third quarter. With a stronger dollar in play, crude became more expensive for holders of other currencies.
Brent was also under pressure as Western policymakers and Iranian officials headed into their second day of talks in order to strike a deal on Iran's disputed nuclear program. CNBC reported that Iran's foreign minister said the discussions were “tough”; however both sides have been positive about the progress that was made.
Iran's nuclear capabilities have long kept Brent prices supported as sanctions barred much of the nation's oil from markets. As the talks between the two sides progress and an agreement becomes more likely, oil prices will could drop even further.
Moving forward investors will also be focused on US nonfarm payroll data due out on Friday in hopes of fresh clues about the Federal Reserve's taper timeline. Although most aren't expecting the bank to cut down on its $85 billion per month bond buying plan until 2014, positive data would help strengthen the case for a sooner than expected pullback.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.