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| | GEO Business | | Oil slips on strong dollar, tumbling equities | Updated at: 2009 PST, Thursday, April 08, 2010
LONDON: Oil prices fell on Thursday, dropping further away from recent 18-month highs as traders tracked lower stock markets, the strengthening dollar and growing US crude inventories.
New York's main contract, light sweet crude for delivery in May, dropped 76 cents to 85.12 dollars a barrel, after spiking above 87 dollars on Tuesday.
London's Brent North Sea crude for May fell 70 cents to 84.89 dollars.
"Crude and products futures are retreating ... as the dollar continued to move higher and global equities slipped," said analyst Addison Armstrong at US-based Tradition Energy.
European shares tumbled Thursday as investors tracked heightened worries about the Greek debt crisis while the eurozone and Britain held interest rates unchanged at record lows.
Prices also took a hit from the strong dollar, which makes dollar-priced oil more expensive for buyers using weaker currencies and therefore tends to dent demand.
The European single currency sank deeper against the dollar on Thursday amid persistent fears about Greece's ability to overcome a massive debt crisis.
In early morning London deals, the euro tumbled as low as 1.3283 dollars -- plumbing depths last seen on March 25.
"Oil prices, pressured by a strong dollar and high US crude stocks, continue to decline for the second day," PVM analysts said in a note to clients.
Crude fell on Wednesday as traders reacted to rising US crude inventories that suggested weaker demand in the world's biggest energy-consuming nation.
The US Energy Information Administration (EIA) said American oil inventories advanced by two million barrels in the week ending April 2, more than market consensus expectations for a gain of 1.4 million barrels.
Gasoline (petrol) stockpiles tumbled 2.5 million barrels, while distillates -- which include diesel and heating fuel -- rose 1.1 million barrels.
Oil briefly hit a fresh 18-month high on Tuesday as the market found support from a batch of encouraging economic indicators in the United States.
New York crude touched 87.09 dollars -- the highest level since October 9, 2008.
"The market had gotten ahead of itself when it marched towards 87 dollars," said Jason Feer, vice president with energy market analysts Argus Media.
"There are no physical reasons why prices should be moving so high," he added.
Investors were taking a step back from the notion that recent positive economic data would spur stronger oil demand after the larger-than-expected increase in US crude stocks, Feer said.
"Even if people are justified in being so optimistic (about oil demand), there's an awful lot of spare oil production capacity and refining capacity in the world." |  |
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