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Oil settles lower after dollar strengthens
Source: Agencies |
October 12, 2010, Tuesday
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OIL prices settled lower yesterday as the dollar strengthened and traders hunkered down ahead of some important economic news later this week.
Benchmark oil for November delivery lost 45 cents to settle at US$82.21 a barrel on the New York Mercantile Exchange.
The dollar grew stronger against other currencies yesterday. That pressured oil prices, because a stronger dollar makes crude, priced in dollars, less attractive to investors who buy it with other currencies. In the past week, crude prices have stayed above US$80 a barrel as traders set aside the reality of plentiful supplies and weak demand for oil and gas to focus on the ups and downs of the dollar versus the euro.
Tradition Energy analyst Gene McGillian said that if the dollar gets weaker and stock prices hold their ground, oil may reach its high for the year of US$87.15 a barrel, which it hit in early May.
But traders eventually will have to take the supply glut into consideration without improving economic news. "You don't have signs that the economy is improving enough to really tear down some of those inventory levels or that fuel demand is picking up," he said.
Oil analyst and trader Stephen Schork said crude oil hovering in the mid-US$80 a barrel range translates into about US$3 a gallon of gasoline at the pump in the U.S. "As long as traders continue to chase the dollar lower, they will continue to push oil prices higher," he said in his newsletter, The Schork Report.
Oil traders also monitor stock markets for signs of consumer confidence. Stocks were muted yesterday without any major economic or earnings reports to move them. The Dow Jones Industrial Average closed up almost four points. The NASDAQ and the S&P 500 were little changed as well.
Later this week, the government will release reports on inflation, retail sales and consumer sentiment, which could have an impact on oil and gas prices.
In other Nymex trading, heating oil lost 0.29 cent to settle at US$2.2790 a gallon, gasoline added 1.43 cents to settle at US$2.1655 a gallon and natural gas lost 5 cents to settle at US$3.601 per 1,000 cubic feet.
In London, Brent crude dropped 31 cents to settle at US$83.72 a barrel on the ICE futures exchange.
Benchmark oil for November delivery lost 45 cents to settle at US$82.21 a barrel on the New York Mercantile Exchange.
The dollar grew stronger against other currencies yesterday. That pressured oil prices, because a stronger dollar makes crude, priced in dollars, less attractive to investors who buy it with other currencies. In the past week, crude prices have stayed above US$80 a barrel as traders set aside the reality of plentiful supplies and weak demand for oil and gas to focus on the ups and downs of the dollar versus the euro.
Tradition Energy analyst Gene McGillian said that if the dollar gets weaker and stock prices hold their ground, oil may reach its high for the year of US$87.15 a barrel, which it hit in early May.
But traders eventually will have to take the supply glut into consideration without improving economic news. "You don't have signs that the economy is improving enough to really tear down some of those inventory levels or that fuel demand is picking up," he said.
Oil analyst and trader Stephen Schork said crude oil hovering in the mid-US$80 a barrel range translates into about US$3 a gallon of gasoline at the pump in the U.S. "As long as traders continue to chase the dollar lower, they will continue to push oil prices higher," he said in his newsletter, The Schork Report.
Oil traders also monitor stock markets for signs of consumer confidence. Stocks were muted yesterday without any major economic or earnings reports to move them. The Dow Jones Industrial Average closed up almost four points. The NASDAQ and the S&P 500 were little changed as well.
Later this week, the government will release reports on inflation, retail sales and consumer sentiment, which could have an impact on oil and gas prices.
In other Nymex trading, heating oil lost 0.29 cent to settle at US$2.2790 a gallon, gasoline added 1.43 cents to settle at US$2.1655 a gallon and natural gas lost 5 cents to settle at US$3.601 per 1,000 cubic feet.
In London, Brent crude dropped 31 cents to settle at US$83.72 a barrel on the ICE futures exchange.
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