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Friday, April 11, 2008
Oil prices fall below US$110 on stronger US dollar (12:29 p.m.)
SINGAPORE -- Oil prices retreated further Friday to below US$110 a barrel as a stronger U.S. dollar prompted investors to book profits after this week's rally to a record.
An unexpected decline in U.S. crude and gasoline inventories drove oil prices to a trading record of US$112.21 a barrel on Wednesday amid concerns about inadequate supplies ahead of the Northern Hemisphere summer driving season.
But oil slipped back the next day after data from tanker tracking firm Oil Movements showed that shipments from members of the Organization of Petroleum Exporting Countries rose last week. Oil Movements' report suggests more supplies might soon come to market.
Prices were also weighed down by the U.S. dollar's recovery from an earlier low against the euro and its rise against the pound.
Crude oil's recent run above US$100 a barrel has been largely attributed to the steadily depreciating greenback. A weakening dollar attracts investors to commodities as a hedge against inflation, but when the dollar rises, the effect tends to reverse as oil also becomes more expensive to investors overseas.
Light, sweet crude for May delivery fell 51 cents to US$109.60 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract dropped 76 cents to settle at $110.11 a barrel on Thursday.
More negative U.S. economic data also appeared to have taken steam out of oil's precipitous price rise. The Commerce Department reported the first decline in oil imports in a year - a clear sign that high prices and an economic downturn were hurting crude sales.
Prices have shown little inclination to fall in response to eroding demand. With gasoline supplies shrinking and the Northern Hemisphere summer approaching - when demand, while weaker than last year, will be stronger than it is now - consumers may have to wait until later in the year for price relief.
The U.S. Energy Information Administration's inventory report, closely watched by the market, showed Wednesday that crude stocks fell 3.2 million barrels last week. Some analysts cautioned against reading too much into last week's drop in crude supplies, noting a sharp drop in imports over the same period.
In other Nymex trading Friday, heating oil futures slipped 1.6 cents to US$3.178 a gallon (3.8 liters) while gasoline prices lost 0.62 cent to US$2.7859 a gallon. Natural gas futures fell 14.8 cents to US$9.95 per 1,000 cubic feet.
In London, Brent crude futures fell 29 cents to US$107.91 a barrel on the ICE Futures exchange. (AP) |
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