Oil falls to near $98 as US dollar strengthens
Friday, May 13, 2011
SINGAPORE (AP) — Oil prices fell to near $98 a barrel Friday in Asia as the U.S. dollar strengthened, making commodities such as crude more expensive for investors with other currencies.
Benchmark crude for June delivery was down 53 cents to $98.44 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract gained 76 cents to settle at $98.97 on Thursday.
In London, Brent crude for June delivery was down 13 cents to $112.85 a barrel on the ICE Futures exchange.
Crude prices have zigzagged near $100 for most of this week, broadly tracking the value of the dollar. When the dollar weakens — as it has most of this year — oil tends to rise while it usually falls when the dollar is stronger.
The euro fell to $1.4198 on Friday from $1.4241 late Thursday.
“Oil is maintaining a tight correlation with the dollar for now,” Ritterbusch and Associates said in a report. “Given some expected wide swings in the currencies ... exceptional oil price volatility will likely remain intact through of this month.”
Traders are also closely watching for signs higher fuel costs are crimping U.S. crude demand. The International Energy Agency on Thursday cut its estimate for global demand this year by 190,000 barrels per day, noting that higher gasoline prices in the U.S. appeared to be forcing Americans to cut back on driving.
Some analysts expect demand in developing economies to bolster global consumption.
“Overall, the global demand picture has not changed significantly,” Barclays Capital said.
In other Nymex trading in June contracts, heating oil added 3.7 cents to $2.94 a gallon and gasoline fell 4.7 cents to $3.17 a gallon. Natural gas futures were up 0.2 cent at $4.18 per 1,000 cubic feet.
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