OIL FUTURES: Crude Falls; Market Digests Bin Laden Death News

SINGAPORE (Dow Jones)--Crude-oil futures fell in Asia Tuesday as the U.S. dollar continued to strengthen after the confirmation of Osama bin Laden's death Monday.

The market remained somewhat divided, however, as to whether bin Laden's death would necessitate a widening geopolitical risk premium or provide a setting for increased stability across the Middle East and Central Asia.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in June traded at $112.92 a barrel at 0603 GMT, down $0.60 in the Globex electronic session. June Brent crude on London's ICE Futures exchange fell $0.61 to $124.51 a barrel.

Benchmark contracts remained under selling pressure as the U.S. dollar extended its advance against most major currencies on the belief bin Laden's death could reduce U.S. susceptibility to terrorist attacks.

The euro fell to $1.4816 against the greenback from $1.4830 late Monday in New York, while the ICE Dollar Index, which tracks the dollar against a basket of currencies, was at 73.082, compared with 73.029 in New York trade.

"I'd say both the currency and oil markets are still busy digesting the news that bin Laden is dead," said a trader at SK Energy. "I honestly don't see how the man's death could lift the U.S. economy, but at least his demise is a big sentiment/morale booster for the nation, its people and the greenback."

At the same time, many currency analysts share the view that the U.S. Federal Reserve will likely keep rates ultra-low much longer than most of the world's major central banks, giving markets little reason to choose the dollar over higher-yielding currencies.

"While the killing of bin Laden has encouraged patriotism, it doesn't necessarily change the factors that are dollar-negative," said Jessica Hoversen, fixed income and foreign exchange analyst at MF Global.

Meanwhile, Cameron Hanover said in a research note that Fed Chairman Ben Bernanke is much more central to the future of oil prices than Osama bin Laden or trouble-making leaders in the Middle East, North Africa and Central Asia.

"The Fed's words will be the ones that move oil prices the farthest," Cameron Hanover said. "As days pile upon days, the Fed almost certainly has its arms around more of them, with Bernanke's words ringing in the ears of more traders than the ramblings of Moammar Gadhafi." it added.

Market participants said that while it's difficult to reach consensus on what bin Laden's death really means to the supply and demand of oil, it is quite certain that the ongoing conflict and oil production problems in the Middle East and North Africa won't be resolved any time soon.

"No one believes that the death of Osama bin Laden restores a single lost barrel of Libyan oil production. Nor does it make the world safer for Iranian nuclear weapons, if they are built," Cameron Hanover said.

Nymex reformulated gasoline blendstock for June--the benchmark gasoline contract--fell 170 points to $3.3309 a gallon, while June heating oil traded at $3.2377, 144 points lower.

(Source: http://online.wsj.com/article/BT-CO-20110503-701913.html)