Brent Falls 6.0% to $106.65 as Dollar and U.S. Stock Indicators Decline
Key Facts
The U.S. dollar fell 0.3% to 101.63 against a basket of currencies on November 2, after touching a one-month low during the session, as oil prices and safe-haven demand declined. By 13:57 GMT, Brent futures were down 6.0% at $106.65 a barrel, while West Texas Intermediate fell 6.1% to $97.75. A Reuters report carried by Investing.com attributed the dollar's weakness to investor optimism that geopolitical tensions could ease. “Risk appetite is greater, oil prices are lower, and that makes the mood more conducive to risk-taking and puts a little pressure on the dollar,” said Kit Juckes, head of FX strategy at Société Générale. The moves showed that the impact of falling crude was not uniform across currencies; the weaker U.S. dollar limited losses in the Canadian dollar linked to lower oil prices.
The euro rose 0.5% to $1.1212, while sterling edged up to $1.3414, according to Reuters data published by Investing.com. The moves were consistent with a weaker dollar against a basket of currencies, while EL7 daily closes showed the euro/dollar rising to 1.12058 on November 2 from 1.11584 on October 30. Sterling/dollar also closed higher at 1.34239, up from 1.33869 over the same period. EL7 oil closes showed Brent falling to $106.1 a barrel from $113.43 on October 30, and U.S. crude declining to $97.46 from $104.12. These closing prices differ from the trading prices Reuters reported during the session, reflecting different time snapshots and measurement sources.
In the Canadian currency market, the U.S. dollar/Canadian dollar pair rose to 1.3973 from Friday's 1.3955, reflecting a slight decline in the Canadian currency, which the report valued at about 71.57 U.S. cents. The morning report said falling crude prices reduced support for the commodity-linked currency, while a weaker U.S. dollar helped contain its losses. The dollar index had touched a one-month low, partly easing oil's pressure on the Canadian dollar. In early trading, Brent was down about 3.7% at $109.23 a barrel, while West Texas Intermediate fell 3.8% to $100.14. Prices then extended their declines during the session, according to Reuters levels at 13:57 GMT.
Reports linked the oil decline to hopes of easing disruption to energy supplies in the Middle East, as diplomatic activity continued around the U.S.-Iran conflict. Iranian President Masoud Pezeshkian said the supreme leader had granted the government certain powers over peace talks, adding that Tehran “will try to resolve the problem through dialogue,” according to Iranian state media. A Reuters report said investors had reduced safe-haven positions amid optimism that negotiations involving Iran, Qatar and the United States could ease tensions. “The market is still reacting very sensitively to every headline coming out of the Middle East,” said Giovanni Staunovo, an oil analyst at UBS. Crude's decline followed a sharp rise in October that drove prices to their highest levels in six months, according to an Investing.com report.
The agency reported Brent down 7.4% at $105.03 a barrel in that snapshot, and said the oil decline helped stocks recover. The difference in reported declines shows how quickly crude prices moved during the day, making each reading specific to a particular time. The Associated Press said the most actively traded Brent contract had ranged between about $70 and $120 a barrel since before the war began, with rapid reversals in direction. News about the diplomatic track and energy supplies remained in focus in the pricing of oil and broader markets.
Investors were awaiting the S&P Global Canadian manufacturing purchasing managers' index on November 2 at 9:30 a.m. Eastern time, followed by the U.S. ISM manufacturing index at 10:00 a.m. These data had not been released by the time of the morning report, so they were not a prior cause of the Canadian dollar move it described. Market attention then shifted to Canadian and U.S. employment reports scheduled for Friday, November 6. The upcoming data releases will offer a point of reference for assessing economic activity in both countries after the currency and oil moves at the start of the week.