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Weakening dollar helps stabilize crude oil price

OIL prices stayed above US$61 a barrel yesterday, helped by a weakening dollar.

Benchmark crude for July delivery was up 49 cents to US$61.54 a barrel by midday in Europe yesterday in electronic trading on the New York Mercantile Exchange. On Thursday, the contract fell 99 cents to settle at US$61.05.

The dollar fell yesterday to a four-month low against the euro, which was trading at US$1.3948.

Crude prices have also been buoyed this week by two refinery fires in the United States and renewed fighting between the government and rebels in Nigeria, Africa's largest oil producer.

Investors brushed off pessimistic comments this week from the US central bank. The Federal Reserve sees "significant downside risks" for the US economy, with the global financial system still "vulnerable to further shocks," according to minutes of a Fed meeting.

The comments helped push stocks down, with the Dow Jones Industrial Average falling 1.5 percent on Thursday. Most Asian stock indexes also dropped yesterday, while in Europe most showed slight gains.

Olivier Jakob, of Petromatrix in Switzerland, said that US$60 a barrel was a "further sign of confirmation that (the price of) crude oil is starting to have a trading life of its own rather than being a pure correlation to equities."

Oil prices have jumped about 75 percent since March on expectations the worst of the recession is over.

"We're going to see a recovery but it looks like its going to be very muddled," said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "If stocks keep falling, oil will eventually follow."

In other Nymex trading, gasoline for June delivery rose 1.11 cents to US$1.8108 a gallon and heating oil gained 0.6 cent to US$1.5354 a gallon. Natural gas for June delivery was up 0.2 cent to US$3.605 per 1,000 cubic feet. In London, Brent prices rose 49 cents to US$60.42 a barrel on the ICE Futures exchange.


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