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Oil falls on stronger dollar
Source: Agencies |
October 16, 2010, Saturday
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OIL and other energy contracts fell yesterday as the dollar grew stronger and the economic picture remained unclear as banks struggled with the foreclosure crisis.
Benchmark oil for November delivery lost US$1.44 to settle at US$81.25 a barrel on the New York Mercantile Exchange.
The dollar edged up in New York against the euro and the pound after sinking to multimonth lows earlier. A broad measure of the dollar's value ticked up 0.1 percent after dropping about 8 percent since Federal Reserve Chairman Ben Bernanke first hinted that the Fed was ready to act to provide further support to the economy. He underscored those expectations yesterday.
In late trading, the euro fell to US$1.3963 from US$1.4057 late Thursday. Earlier in the day, it hit a nine-month high of US$1.4157.
There was good news and bad news in energy prices this week. While US drivers paid more to fill their tanks than they did a year ago, some analysts think it shouldn't be long before gas is cheaper again.
Also, the government said many Americans won't see big spikes in their winter heating bills.
The national average for a gallon of regular gasoline was US$2.833 yesterday. That's about a nickel more than a week ago and up nearly 35 cents from a year ago, according to AAA, Wright Express and the Oil Price Information Service.
Even though demand for gasoline has fallen since summer, a weaker dollar has kept crude hovering between US$81 and US$83 a barrel this month, which is translating into higher prices at the pump. Crude, like most commodities, is priced in dollars. A weaker dollar makes it more attractive for buyers who use foreign currencies.
The Labor Department said the Consumer Price Index - the inflation rate - rose 0.1 percent in September, compared with a 0.3 percent increase in August. Gas prices increased 0.7 percent last month.
Meanwhile, the government's Short-Term Energy Outlook indicated that most US consumers should be able to keep heating bills under control this winter, although heating oil prices will rise. Americans who rely on heating oil are expected to pay about US$220, or 12 percent, more this winter. Much of that is due to higher crude prices which have contributed to a 16 percent increase in wholesale heating oil prices from year-ago levels.
The EIA forecast a 4 percent increase in heating bills for households using natural gas, which translates into about US$27 more for the winter. Supplies of natural gas, like oil, remain plentiful. Much of the US relies on natural gas for heating, while heating oil is used mainly in the Northeast.
In a research report for clients, Cameron Hanover energy consulting agency said traders see natural gas as the least desirable product in the energy market because of abundant supplies and weak demand in the recovering economy.
"The truth is that there is plenty of energy supply out there for the available demand, but oil prices tend to be able to get more from that than natural gas can," the report said.
In other Nymex trading, heating oil fell 5.31 cents to settle at US$2.2308 a gallon, gasoline lost 3.27 cents to settle at US$2.1038 a gallon and natural gas gave up 12.2 cents to settle at US$3.535 per 1,000 cubic feet. Natural gas hit a 52-week low of US$3.520 during the session.
In London, Brent crude dropped US$1.75 to US$82.45 a barrel on the ICE Futures exchange.
Benchmark oil for November delivery lost US$1.44 to settle at US$81.25 a barrel on the New York Mercantile Exchange.
The dollar edged up in New York against the euro and the pound after sinking to multimonth lows earlier. A broad measure of the dollar's value ticked up 0.1 percent after dropping about 8 percent since Federal Reserve Chairman Ben Bernanke first hinted that the Fed was ready to act to provide further support to the economy. He underscored those expectations yesterday.
In late trading, the euro fell to US$1.3963 from US$1.4057 late Thursday. Earlier in the day, it hit a nine-month high of US$1.4157.
There was good news and bad news in energy prices this week. While US drivers paid more to fill their tanks than they did a year ago, some analysts think it shouldn't be long before gas is cheaper again.
Also, the government said many Americans won't see big spikes in their winter heating bills.
The national average for a gallon of regular gasoline was US$2.833 yesterday. That's about a nickel more than a week ago and up nearly 35 cents from a year ago, according to AAA, Wright Express and the Oil Price Information Service.
Even though demand for gasoline has fallen since summer, a weaker dollar has kept crude hovering between US$81 and US$83 a barrel this month, which is translating into higher prices at the pump. Crude, like most commodities, is priced in dollars. A weaker dollar makes it more attractive for buyers who use foreign currencies.
The Labor Department said the Consumer Price Index - the inflation rate - rose 0.1 percent in September, compared with a 0.3 percent increase in August. Gas prices increased 0.7 percent last month.
Meanwhile, the government's Short-Term Energy Outlook indicated that most US consumers should be able to keep heating bills under control this winter, although heating oil prices will rise. Americans who rely on heating oil are expected to pay about US$220, or 12 percent, more this winter. Much of that is due to higher crude prices which have contributed to a 16 percent increase in wholesale heating oil prices from year-ago levels.
The EIA forecast a 4 percent increase in heating bills for households using natural gas, which translates into about US$27 more for the winter. Supplies of natural gas, like oil, remain plentiful. Much of the US relies on natural gas for heating, while heating oil is used mainly in the Northeast.
In a research report for clients, Cameron Hanover energy consulting agency said traders see natural gas as the least desirable product in the energy market because of abundant supplies and weak demand in the recovering economy.
"The truth is that there is plenty of energy supply out there for the available demand, but oil prices tend to be able to get more from that than natural gas can," the report said.
In other Nymex trading, heating oil fell 5.31 cents to settle at US$2.2308 a gallon, gasoline lost 3.27 cents to settle at US$2.1038 a gallon and natural gas gave up 12.2 cents to settle at US$3.535 per 1,000 cubic feet. Natural gas hit a 52-week low of US$3.520 during the session.
In London, Brent crude dropped US$1.75 to US$82.45 a barrel on the ICE Futures exchange.
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