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Oil settles modestly above US$80 after 2-day jump
Source: Agencies |
March 5, 2010, Friday
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A STRONGER dollar pushed oil prices down toward US$80 a barrel yesterday after a two-day jump fueled by growing investor optimism that global crude demand is recovering.
Oil, which is priced in dollars, tends to drop as the dollar rises and makes crude barrels tougher to buy for investors holding foreign money.
Benchmark crude for April delivery fell 66 cents to settle at US$80.21 a barrel on the New York Mercantile Exchange as the U.S. Dollar Index gained 0.83 percent.
In London, Brent crude gave up 71 cents to settle at US$78.54 a barrel on the ICE futures exchange.
Oil prices have traded in the US$70s for most of the last eight months, rising above US$80 several times only to fall back amid concerns that crude demand in developed countries is lagging behind an overall economic recovery.
In afternoon trading in New York, the 16-nation euro dropped back to US$1.3573 from US$1.3700 late Wednesday. The euro had risen above US$1.37 Wednesday for the first time since mid-February as European officials and a credit ratings agency applauded Greek plans to cut spending and raise taxes.
U.S. inventory data released Wednesday by the Energy Information Administration was mixed, with crude and gasoline supplies rising and distillates, which include diesel and heating oil, falling.
Some analysts have been expecting diesel demand to improve as the economy grows.
"This might herald the first signs of a pick-up in distillate demand," Barclays Capital said in a report. "As the normalization in economic growth continues, commensurate to which oil demand recovery becomes more broad-based," inventories should fall.
Others, however, said prices were not in line with oil consumption.
"We still have some difficulty in reconciling the current price action with the fundamental supply and demand," said Olivier Jakob of Petromatrix in Switzerland.
Meanwhile, natural gas prices tumbled yesterday after the government said supplies dropped less than expected last week.
Inventories held in underground storage dropped by 116 billion cubic feet last week. Analysts expected a drop of between 128 billion and 132 billion cubic feet.
Natural gas prices fell after the report. The contract for April delivery lost 18.2 cents, nearly 4 percent, to settle at US$4.575 per 1,000 cubic feet on the New York Mercantile Exchange. Prices dropped as low as US$4.556 earlier in the day, the lowest ever for the April contract.
In other Nymex trading in April contracts, heating oil fell 2.5 cents to settle at US$2.0687 a gallon, and gasoline lost 1.39 cents to settle at US$2.2337 a gallon.
Oil, which is priced in dollars, tends to drop as the dollar rises and makes crude barrels tougher to buy for investors holding foreign money.
Benchmark crude for April delivery fell 66 cents to settle at US$80.21 a barrel on the New York Mercantile Exchange as the U.S. Dollar Index gained 0.83 percent.
In London, Brent crude gave up 71 cents to settle at US$78.54 a barrel on the ICE futures exchange.
Oil prices have traded in the US$70s for most of the last eight months, rising above US$80 several times only to fall back amid concerns that crude demand in developed countries is lagging behind an overall economic recovery.
In afternoon trading in New York, the 16-nation euro dropped back to US$1.3573 from US$1.3700 late Wednesday. The euro had risen above US$1.37 Wednesday for the first time since mid-February as European officials and a credit ratings agency applauded Greek plans to cut spending and raise taxes.
U.S. inventory data released Wednesday by the Energy Information Administration was mixed, with crude and gasoline supplies rising and distillates, which include diesel and heating oil, falling.
Some analysts have been expecting diesel demand to improve as the economy grows.
"This might herald the first signs of a pick-up in distillate demand," Barclays Capital said in a report. "As the normalization in economic growth continues, commensurate to which oil demand recovery becomes more broad-based," inventories should fall.
Others, however, said prices were not in line with oil consumption.
"We still have some difficulty in reconciling the current price action with the fundamental supply and demand," said Olivier Jakob of Petromatrix in Switzerland.
Meanwhile, natural gas prices tumbled yesterday after the government said supplies dropped less than expected last week.
Inventories held in underground storage dropped by 116 billion cubic feet last week. Analysts expected a drop of between 128 billion and 132 billion cubic feet.
Natural gas prices fell after the report. The contract for April delivery lost 18.2 cents, nearly 4 percent, to settle at US$4.575 per 1,000 cubic feet on the New York Mercantile Exchange. Prices dropped as low as US$4.556 earlier in the day, the lowest ever for the April contract.
In other Nymex trading in April contracts, heating oil fell 2.5 cents to settle at US$2.0687 a gallon, and gasoline lost 1.39 cents to settle at US$2.2337 a gallon.
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