Crude Oil Rallies To End Flat As Dollar Weakens

(RTTNews) - U.S. crude oil rallied to end flat on Monday, after the dollar trended lower against a band of select currencies on some weaker than expected pending home sales data from the U.S.

Earlier in the day, crude oil surrendered over $1.5 a barrel after Goldman Sachs Group lowered its oil price forecast for next year, indicating excess supply from non-OPEC producers will outpace global demand.

Goldman Sachs expects U.S. West Texas crude to fall to as low as $70 a barrel and London's Brent to $80 a barrel during the second quarter of 2015. Crude had declined to a low of $79.10 on October 16, the lowest level since June 2012.

Nonetheless, crude oil found some support as the dollar turned lower after a weaker than expected U.S. pending home sales data in September showed only a modest rebound in sales.

Light Sweet Crude Oil futures for December delivery, the most actively traded contract, shed $0.01 to close at $81.00 a barrel on the New York Mercantile Exchange Monday.

Crude prices for December delivery scaled a high of $81.29 a barrel intraday and a low of $79.44.

On Friday, crude oil futures dropped $1.08 or 1.3 percent at $81.01 a barrel after touching a low of $80.36 intraday. News of OPEC with abundant crude stock due to increased shipments from Iraq and Libya dragged down oil prices. Reports that Saudi Arabia shipped less crude oil in September failed to give prices much of a lift.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 85.49 on Monday, down from its previous close of 85.69 late Friday in North American trade. The dollar scaled a high of 85.71 intraday and a low of 85.41.

The euro trended higher against the dollar at $1.2709 on Monday, as compared to its previous close of $1.2679 late Friday in North American trade. The euro scaled a high of $1.2723 intraday and a low of $1.2666.

In economic news from the U.S., a report from the National Association of Realtors showed a modest rebound in pending sales in the month of September. The NAR said its pending home sales index inched up by 0.3 percent to 105.0 in September after falling by 1.0 percent to 104.7 in August. Economists had been expecting pending home sales to increase by about 0.5 percent.

The focus is now on the U.S. Federal Reserve's monetary policy decision, due on Wednesday. It is widely speculated that the Fed may not start hiking interest rates any time soon.

Recent comments from Fed officials indicate a some support for maintaining their asset purchase program for another month, but most economists expect that policy makers will vote to fully wind down QE3.

In economic news from the eurozone, German business confidence deteriorated for the sixth consecutive month to the lowest since late 2012, falling more than expected to 103.2 in October, a survey carried out by the Ifo institute showed.

A Conference Board survey Monday showed the leading economic indicators index for the eurozone that reflect performance of the economy in the near term to have remained unchanged in September. The leading index remained flat month-over-month in September after the 0.6 percent drop in August.

Meanwhile, concerns about the health of eurozone banking industry have eased with none of the major banks failing the stress test by the European Central Bank.

The European Central Bank on Sunday published the results of a thorough year-long examination of the resilience and positions of the 130 largest banks in the euro area as of 31 December 2013. The assessment found a capital shortfall of 25 billion euros at 25 banks. Twelve of the 25 banks have already covered their capital shortfall by increasing their capital by 15 billion euros in 2014. The other banks will have up to nine months to cover the capital shortfall.

From Asia, India is set to for 5.6 percent growth in the fiscal year ending March 31, 2015, the World Bank said in a report on Monday. In its latest India Development Update, the lender predicted an acceleration in growth to 6.4 percent in fiscal 2016 and further to 7 percent in fiscal 2017.

The Federal Reserve is scheduled to announce its monetary policy decision on Wednesday. Investors also look ahead to data on durable goods orders, results of consumer sentiment surveys by the Conference Board and the Reuters and the University of Michigan this week.

Also due for release are advance third quarter GDP estimate, weekly jobless claims data, a report on service sector growth and a reading on Chicago region manufacturing activity.