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Oil falls below US$75 on weak demand, strong dollar
Source: Agencies |
May 14, 2010, Friday
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OIL prices continued to slide yesterday, with crude following the stock market lower as investors were disappointed by a report that showed U.S. jobless claims did not fall as much as expected.
Lower prices were also seen to be caused by the strong dollar, which makes dollar-priced crude more expensive for investors holding other currencies.
Benchmark crude for June delivery dropped US$1.25 to settle at US$74.40 a barrel on the New York Mercantile Exchange. Prices have dropped nearly 15 percent in the last 10 days.
The euro fell to US$1.2568 in late New York trading from US$1.2631 late Wednesday, while the British pound was down to US$1.4443 from US$1.4821.
"Investors are expected to keep an eye on the U.S. dollar/euro movements ... considered to be the main drivers of current crude oil prices in the near term, as volatility still dominates the energy market due to the European economic uncertainty," said a report from Sucden Financial in London.
The Dow Jones Industrial Average was off about 95 points in late afternoon trading. The Labor Department said first-time claims for jobless benefits dipped to 444,000 last week from an upwardly revised 448,000 the previous week. Economists had expected claims to drop to 440,000
U.S. crude inventories have been rising, defying analyst predictions that a recovering economy would boost demand. The Energy Information Administration said Wednesday that oil supplies increased more than expected last week as stockpiles grow for 14 of the last 15 weeks.
Meanwhile, the Paris-based International Energy Agency said Wednesday that global oil demand this year was expected to rise 220,000 barrels a day less than it previously forecast.
Investors are looking to surging demand from developing countries, such as China and India, to bolster oil prices.
Oil prices have yet to be affected by the giant spill in the Gulf of Mexico though there is worry that the spill may eventually interfere with tankers carrying imported oil to Gulf ports and vessels moving refined products to other parts of the country.
The well's owner, BP PLC, said yesterday that its costs for trying to stop the gusher, containing the spill and helping Gulf states foot the response tab totaled US$450 million, up US$100 million since its Monday update to securities regulators. The spill started after an oil rig exploded and sank on April 20.
In other Nymex trading in June contracts, heating oil fell 2.72 cents to settle at US$2.1319 a gallon, gasoline lost 1.53 cents to settle at US$2.1951 a gallon.
Natural gas prices rose 5.5 cents to settle at US$4.339 per 1,000 cubic feet of gas. Prices have jumped about 9 percent since May 5.
In London, Brent crude was down US$1.09 to settle at US$80.51 on the ICE futures exchange.
Lower prices were also seen to be caused by the strong dollar, which makes dollar-priced crude more expensive for investors holding other currencies.
Benchmark crude for June delivery dropped US$1.25 to settle at US$74.40 a barrel on the New York Mercantile Exchange. Prices have dropped nearly 15 percent in the last 10 days.
The euro fell to US$1.2568 in late New York trading from US$1.2631 late Wednesday, while the British pound was down to US$1.4443 from US$1.4821.
"Investors are expected to keep an eye on the U.S. dollar/euro movements ... considered to be the main drivers of current crude oil prices in the near term, as volatility still dominates the energy market due to the European economic uncertainty," said a report from Sucden Financial in London.
The Dow Jones Industrial Average was off about 95 points in late afternoon trading. The Labor Department said first-time claims for jobless benefits dipped to 444,000 last week from an upwardly revised 448,000 the previous week. Economists had expected claims to drop to 440,000
U.S. crude inventories have been rising, defying analyst predictions that a recovering economy would boost demand. The Energy Information Administration said Wednesday that oil supplies increased more than expected last week as stockpiles grow for 14 of the last 15 weeks.
Meanwhile, the Paris-based International Energy Agency said Wednesday that global oil demand this year was expected to rise 220,000 barrels a day less than it previously forecast.
Investors are looking to surging demand from developing countries, such as China and India, to bolster oil prices.
Oil prices have yet to be affected by the giant spill in the Gulf of Mexico though there is worry that the spill may eventually interfere with tankers carrying imported oil to Gulf ports and vessels moving refined products to other parts of the country.
The well's owner, BP PLC, said yesterday that its costs for trying to stop the gusher, containing the spill and helping Gulf states foot the response tab totaled US$450 million, up US$100 million since its Monday update to securities regulators. The spill started after an oil rig exploded and sank on April 20.
In other Nymex trading in June contracts, heating oil fell 2.72 cents to settle at US$2.1319 a gallon, gasoline lost 1.53 cents to settle at US$2.1951 a gallon.
Natural gas prices rose 5.5 cents to settle at US$4.339 per 1,000 cubic feet of gas. Prices have jumped about 9 percent since May 5.
In London, Brent crude was down US$1.09 to settle at US$80.51 on the ICE futures exchange.
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