MW: Oil futures edge higher but demand concerns weigh
By Nick Godt & Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Oil futures rose slightly Monday as concerns over European debt ebbed following a rout in global markets last week, but expectations that demand will remain weak capped gains.
Crude oil for March delivery rose 2 cents to $71.21 a barrel in electronic trading on Globex.
Earlier, the contract rose to an intraday high of $72.39 a barrel, but subsequently gave up nearly all of its gains.
"It's a corrective bounce" after the sharp declines seen at the end of last week, said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
Fritsch expects oil prices to test the $70 level during this week "given continued weakness in fundamental data, a stronger U.S. dollar and falling risk appetite."
Oil prices dropped 2.7% on Friday, as the U.S. dollar rose to an 8-month high against the euro, pressuring dollar-denominated commodity prices.
Traders also digested economic news on Friday. The Labor Department reported that the U.S. unemployment rate fell to 9.7% in January from 10% in December. However, nonfarm payrolls dropped by 20,000 in January, while economists had expected a small increase.
Under pressure all week, U.S. stocks still managed to rebound by the end of trading on Friday. Yet, selling pressure returned early Monday, with the Dow Jones Industrial Average (INDU 9,974, -37.93, -0.38%) recently down 77 points and the S&P 500 index (SPX 1,065, -0.94, -0.09%) down 0.6%.
On Monday, the dollar rose against its rivals, particularly the British pound. Dollar strength typically weighs on oil prices, because it makes the commodity more expensive for holders of other currencies.
