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Oil prices settle lower on bin Laden, dollar
Source: Agencies |
May 3, 2011, Tuesday
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OIL settled slightly lower yesterday after volatile trading driven by uncertainty about extremist retaliation for the death of Osama bin Laden and the strength of the dollar.
Benchmark crude for June delivery fell 41 cents to settle at US$113.52 a barrel on the New York Mercantile Exchange. In London, Brent crude lost 77 cents to settle at US$125.12 a barrel on the ICE Futures exchange.
Bin Laden was killed Sunday by US forces in Pakistan. Oil fell below US$111 a barrel early yesterday morning shortly after President Barack Obama announced bin Laden's death. By midmorning it was on the rise again, reaching US$114.83 before it reversed course. Analysts say traders are concerned that bin Laden's death may lead to retaliation from his followers that could affect oil supplies.
"It's kind of a see-saw effect," said Michael Lynch, president of Strategic Energy & Economic Research. "There will be a fear, I think, in the short-term in the markets that something might happen in the next week or two. I do think in the longer term, it suggests likely more stability in the Middle East."
Oil also followed the dollar's ups and downs. Oil rose as the dollar retreated from an early rally on news of bin Laden's death. Later, as the dollar came back from its low, crude fell. Oil is priced in dollars. A weaker dollar makes crude more attractive to buyers with foreign currency, and the price tends to rise. The opposite often happens when the dollar strengthens.
Lynch thinks bin Laden's death eventually may represent a tipping point for global oil and commodities prices, and the exit of Libya's Moammar Gadhafi could remove further uncertainty about oil supplies in the region.
"Right now, partly out of deficit concerns and continuing unrest in Libya and Syria, there's still some demand for safe havens, including commodities."
Tom Bentz, director of BNP Paribas Commodity Futures, said traders' main concerns are the lingering issues of sovereign debt and the economic recovery. "For the most part nothing's really changed," he said. "Osama bin Laden, whether he's here or not, has nothing to do with the price of oil."
In other trading on the Nymex, heating oil fell 2.37 cents per gallon (3.79 liters) to settle at US$3.2521, gasoline futures lost 5.05 cents to settle at US$3.3479 and natural gas settled a fraction of a cent higher at US$4.763 per 1,000 cubic feet (28.32 cubic meters).
Benchmark crude for June delivery fell 41 cents to settle at US$113.52 a barrel on the New York Mercantile Exchange. In London, Brent crude lost 77 cents to settle at US$125.12 a barrel on the ICE Futures exchange.
Bin Laden was killed Sunday by US forces in Pakistan. Oil fell below US$111 a barrel early yesterday morning shortly after President Barack Obama announced bin Laden's death. By midmorning it was on the rise again, reaching US$114.83 before it reversed course. Analysts say traders are concerned that bin Laden's death may lead to retaliation from his followers that could affect oil supplies.
"It's kind of a see-saw effect," said Michael Lynch, president of Strategic Energy & Economic Research. "There will be a fear, I think, in the short-term in the markets that something might happen in the next week or two. I do think in the longer term, it suggests likely more stability in the Middle East."
Oil also followed the dollar's ups and downs. Oil rose as the dollar retreated from an early rally on news of bin Laden's death. Later, as the dollar came back from its low, crude fell. Oil is priced in dollars. A weaker dollar makes crude more attractive to buyers with foreign currency, and the price tends to rise. The opposite often happens when the dollar strengthens.
Lynch thinks bin Laden's death eventually may represent a tipping point for global oil and commodities prices, and the exit of Libya's Moammar Gadhafi could remove further uncertainty about oil supplies in the region.
"Right now, partly out of deficit concerns and continuing unrest in Libya and Syria, there's still some demand for safe havens, including commodities."
Tom Bentz, director of BNP Paribas Commodity Futures, said traders' main concerns are the lingering issues of sovereign debt and the economic recovery. "For the most part nothing's really changed," he said. "Osama bin Laden, whether he's here or not, has nothing to do with the price of oil."
In other trading on the Nymex, heating oil fell 2.37 cents per gallon (3.79 liters) to settle at US$3.2521, gasoline futures lost 5.05 cents to settle at US$3.3479 and natural gas settled a fraction of a cent higher at US$4.763 per 1,000 cubic feet (28.32 cubic meters).
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