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Oil falls below US$85
Source: Agencies |
April 27, 2010, Tuesday
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OIL prices eased yesterday on a stronger dollar and ample crude inventories, after jumping in the past week. Anxiety over an eventual financial disaster of Greece was a contributing factor.
Benchmark crude for May delivery fell 92 cents to settle at US$84.20 a barrel on the New York Mercantile Exchange. Earlier in the session, it rose as high as US$85.63, as growing investor optimism about the U.S. economy boosted equity and commodity prices.
"Stronger-than-expected data on order intake and U.S. home sales have kindled hopes that the economic recovery of the world's largest oil consumer is gaining momentum," said a report from Commerzbank in Frankfurt.
Gains by the dollar, however, were helping to cap oil prices by making crude more expensive for investors holding other currencies.
The 16-nation euro dropped to US$1.3331 in New York trading yesterday. Swelling deficits and rising borrowing costs in Greece, Portugal and other European countries have dragged the euro lower versus the dollar this year.
Crude rose nearly 4 percent in the past week, fueled by strong U.S. economic data and Greece's decision to accept a €45 billion bailout package from other eurozone countries and the International Monetary Fund .
Oil prices have doubled in the past year as various economic indicators and a surging stock market suggest the Great Recession is over and that energy consumption will improve, especially in emerging markets such as China and Latin America.
Despite growing corporate earnings, the unemployment rate remains high and U.S. crude demand hasn't yet recovered strongly.
"Crude inventories are still very high," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "Oil prices would be a lot lower than US$85 if you worried about fundamentals."
In other Nymex trading in May contracts, heating oil fell 1.34 cents to settle at US$2.2371 a gallon, and gasoline dropped 1.22 cents to settle at US$2.3409 a gallon. Natural gas added a half penny to settle at US$4.262 per 1,000 cubic feet.
In London, Brent crude gave up 42 cents to settle at US$86.83 a barrel on the ICE futures exchange.
Benchmark crude for May delivery fell 92 cents to settle at US$84.20 a barrel on the New York Mercantile Exchange. Earlier in the session, it rose as high as US$85.63, as growing investor optimism about the U.S. economy boosted equity and commodity prices.
"Stronger-than-expected data on order intake and U.S. home sales have kindled hopes that the economic recovery of the world's largest oil consumer is gaining momentum," said a report from Commerzbank in Frankfurt.
Gains by the dollar, however, were helping to cap oil prices by making crude more expensive for investors holding other currencies.
The 16-nation euro dropped to US$1.3331 in New York trading yesterday. Swelling deficits and rising borrowing costs in Greece, Portugal and other European countries have dragged the euro lower versus the dollar this year.
Crude rose nearly 4 percent in the past week, fueled by strong U.S. economic data and Greece's decision to accept a €45 billion bailout package from other eurozone countries and the International Monetary Fund .
Oil prices have doubled in the past year as various economic indicators and a surging stock market suggest the Great Recession is over and that energy consumption will improve, especially in emerging markets such as China and Latin America.
Despite growing corporate earnings, the unemployment rate remains high and U.S. crude demand hasn't yet recovered strongly.
"Crude inventories are still very high," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "Oil prices would be a lot lower than US$85 if you worried about fundamentals."
In other Nymex trading in May contracts, heating oil fell 1.34 cents to settle at US$2.2371 a gallon, and gasoline dropped 1.22 cents to settle at US$2.3409 a gallon. Natural gas added a half penny to settle at US$4.262 per 1,000 cubic feet.
In London, Brent crude gave up 42 cents to settle at US$86.83 a barrel on the ICE futures exchange.
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