Commodities were tracking movements in currency markets today.
After rising in the morning, crude oil futures declined later in the session after traders started pouring money into the US dollar on the back of the strong employment data released by the Labor Department on Friday.
Non-farm payrolls rose by more than projected with the Labor Department’s numbers showing a 151,000 gain in October, while analysts polled by Dow Jones Newswires expected to see 60,000 new jobs added during the month.
Losses in oil futures were curbed by concerns over an attack on an offshore oil rig in Nigeria, which pushed the prices up earlier in the day.
Oil prices rallied, hitting two year highs today after the Federal Reserve last week announced a US$600 billion round of asset purchases in an attempt to drive up inflation to encourage more spending and create jobs.
The move raised expectations of a higher level of economic activity and greater energy demand.
It also pushed lower the US dollar, making the dollar-denominated crude cheaper for holders of other currencies, lifting demand further.
Traders also were optimistic about Friday’s jobs report. However, it showed that the unemployment rate remained at 9.6%.
US light sweet crude for December delivery declined to US$86.64/barrel, while January crude fell to US$87.28/barrel on the New York Mercantile Exchange (NYMEX).
On the ICE Exchange, December Brent Crude dropped to US$87.70/barrel. Brent for January last traded at US$87.95/barrel.
Blue chip oil producers were in the red today, albeit with small losses. Cairn Energy (LON:CNE) declined marginally, as did BP (LON:BP), which fellow supermajor Shell (LON:RDSB) dropped 1.2%.
BG Group (LON:BG) and Tullow Oil (LON:TLW) advanced 1% and 1.6% respectively.
Petrofac (LON:PFC) was sitting just below the opening level, while another oil and gas engineering firm Amec (LON:AMEC) outperformed the sector, rising 1.15%.
JKX Oil & Gas (LON:JKX) outperformed fellow midcaps, surging 4%.
Melrose Resources (LON:MRS) moved in the opposite direction, dropping 3.7%. Heritage Oil (LON:HOIL) declined 3.3%, while Soco International (LON:SIA) and Dragon Oil (LON:DGO) lost 1.5% and 1% respectively.
Premier Oil (LON:PMO) and Salamander Energy (LON:SMDR) declined marginally.
Services companies Wood Group (LON:WG) and Wellstream Holdings (LON:WSM) shed just over 1%.
Chinese coal bed methane (CBM) gas producer Green Dragon Gas (LON:GDG) and US focused Caza Oil & Gas (LON:CAZA) were among the leaders in the sector on AIM with gains of 12%.
Mongolia operating Petro Matad (LON:MATD) also did well, rising 5.5%.