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Oil settles below US$98
Source: Agencies |
May 24, 2011, Tuesday
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OIL dropped more than 2 percent yesterday as the dollar strengthened and an energy research group said it expected the growth in Chinese demand for oil to slow later this year.
Benchmark crude for July delivery lost US$2.40, or 2.4 percent, to settle at US$97.70 per barrel on the New York Mercantile Exchange.
In London, Brent crude gave up US$2.29 or 2 percent, to settle at US$110.10 per barrel on the ICE Futures exchange.
Crude dropped as the dollar rose against other currencies. Oil is priced in dollars, and it tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money. The U.S. Dollar Index, which measures the dollar against other major currencies, rose 0.7 percent amid concerns about Europe's debt crisis.
Last week credit ratings agency Fitch downgraded Greece again and Standard & Poor's lowered Italy's ratings outlook. The euro tanked on a combination of credit rating downgrades, a big election defeat for Spain's governing party and disagreements among top European officials on how to deal with the financial crisis.
Meanwhile Platts, the energy information arm of McGraw-Hill Cos., reported yesterday that the rapid rise in China's oil consumption slowed in April. China consumed 9.37 million barrels per day in April, up 8.3 percent from the same period last year, but down from the 10 percent average growth in the first quarter of this year.
A decelerating economy and high oil prices were "denting end-user demand" in China, Platts said. China is the second biggest petroleum consumer in the world behind the U.S.
Other government and industry data show that gasoline demand in the U.S. has declined for two months as pump prices rose above US$4 per gallon in many states. The Platts report suggests that international gasoline demand also has been hurt by higher prices.
"You have to ask how unrealistic it's been that prices have been pushed up to this level," analyst and trader Stephen Schork said. "There could be further weakness in this market."
In other Nymex trading, heating oil lost 7.12 cents to settle at US$2.8471 per gallon and gasoline futures added 0.23 cent to settle at US$2.9381 per gallon. Natural gas gained 10.3 cents to settle at US$4.393 per 1,000 cubic feet.__-
Chris Kahn can be reached at http://twitter.com/ChrisKahnAP
Associated Press Writer Pan Pylas contributed to this story from London.
Benchmark crude for July delivery lost US$2.40, or 2.4 percent, to settle at US$97.70 per barrel on the New York Mercantile Exchange.
In London, Brent crude gave up US$2.29 or 2 percent, to settle at US$110.10 per barrel on the ICE Futures exchange.
Crude dropped as the dollar rose against other currencies. Oil is priced in dollars, and it tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money. The U.S. Dollar Index, which measures the dollar against other major currencies, rose 0.7 percent amid concerns about Europe's debt crisis.
Last week credit ratings agency Fitch downgraded Greece again and Standard & Poor's lowered Italy's ratings outlook. The euro tanked on a combination of credit rating downgrades, a big election defeat for Spain's governing party and disagreements among top European officials on how to deal with the financial crisis.
Meanwhile Platts, the energy information arm of McGraw-Hill Cos., reported yesterday that the rapid rise in China's oil consumption slowed in April. China consumed 9.37 million barrels per day in April, up 8.3 percent from the same period last year, but down from the 10 percent average growth in the first quarter of this year.
A decelerating economy and high oil prices were "denting end-user demand" in China, Platts said. China is the second biggest petroleum consumer in the world behind the U.S.
Other government and industry data show that gasoline demand in the U.S. has declined for two months as pump prices rose above US$4 per gallon in many states. The Platts report suggests that international gasoline demand also has been hurt by higher prices.
"You have to ask how unrealistic it's been that prices have been pushed up to this level," analyst and trader Stephen Schork said. "There could be further weakness in this market."
In other Nymex trading, heating oil lost 7.12 cents to settle at US$2.8471 per gallon and gasoline futures added 0.23 cent to settle at US$2.9381 per gallon. Natural gas gained 10.3 cents to settle at US$4.393 per 1,000 cubic feet.__-
Chris Kahn can be reached at http://twitter.com/ChrisKahnAP
Associated Press Writer Pan Pylas contributed to this story from London.
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