OIL FUTURES: Crude prices fall on unchanged China loan rates, dollar strength

Crude oil futures eased in midafternoon trading in Asia Nov. 25, reacting from a surge in the dollar at the tail end of last week and news that China, the world's largest crude importer, had kept its one-year medium-term lending facility unchanged at 2%.

The downtrend follows a sharp climb of $4.13/b week on week to $75.17/b on Nov. 22, which was propelled by mounting supply-side concerns from the Russia-Ukraine war.

At 3:11 pm Singapore time (0711 GMT), the ICE January Brent futures contract was down 45 cents/b (0.60%) from the previous close at $74.72/b while the NYMEX January light sweet crude contract was down 47 cents/b (0.66%) to $70.77/b.

"Oil prices rose last Friday, seeing a weekly gain of more than 5%, as the geopolitical worries intensified," said UOB analysts in a research note Nov. 25.

Market participants anticipated that incoming US President Donald Trump could bring the Russia-Ukraine conflict to an end even as the existing US administration has been bolstering its support of Ukraine with more weapons.

Meanwhile, the Middle East supplies remain at risk due to the Israel-Hamas war, with air strikes reported by the Israel Defense Forces' official Telegram channel in Lebanon Nov. 24. This was followed by a report of projectiles launched from Lebanon into Israel Nov. 25, said the IDF.

The ICE US Dollar Index had closed at a high of 107.507 on Nov. 22, up 1.22% week on week, to a milestone high, showed ICE two-year historical data. The index has since eased to 106.950 at 0704 GMT Nov. 25, ICE data showed.

A stronger dollar results in dollar-denominated assets like oil futures becoming more expensive to investors holding foreign currencies, thus dampening demand for these assets.

"The dollar index has soared to its highest since the intense energy price shocks of autumn 2022. Growing concerns about global economic stability and the looming threat of a new trade war under the guidance of President-elect Donald Trump fuel this surge," SPI Asset Management's Managing Partner Stephen Innes said.

Dubai crude

Dubai crude swaps and intermonth spreads were mixed in midafternoon trading in Asia on Nov. 25 from the previous close.

The January Dubai swap was pegged at $73.08/b at 3:11 pm Singapore time (0711 GMT), down 17 cents/b (0.23%) from the previous Asian market close.

The December-January Dubai swap intermonth spread was pegged at 36 cents/b, unchanged over the same period, and the January-February intermonth spread was pegged at 39 cents/b, narrower by 8 cents/b over the same period.

The January Brent-Dubai exchange of futures for swaps was pegged at $1.63/b, up by 10 cents/b.