Oil below $116 as firm dollar sparks sell-off - Emirates24|7

Oil below $116 as firm dollar sparks sell-off

 

Oil retreated to under $116 a barrel on Friday, as a stronger dollar ignited a sell-off and investors shifted cash to equities, but concerns over supply disruptions limited losses.


US light crude for June delivery dropped 46 cents to $115.60 a barrel by 0107 GMT, extending a loss of $2.24 a barrel on Thursday in New York.

Prices have weakened 3.6 per cent from the record high of $119.90 a barrel touched on Tuesday. A sliding greenback devalues US dollar-denominated financial assets, prompting funds to move into oil and other commodities.

"The risks of an economic slowdown in the European Union caused the selling of the euro against the dollar," said Tetsu Emori, fund manager at Astmax Co Ltd in Tokyo.

The dollar steadied against the euro and the yen, holding firm after data the previous day showed signs of resilience in the US labour market.

The euro stayed away from its record high of $1.6020 hit on Tuesday, weighed down by weak economic growth data in Germany and France -- the euro zone's two biggest markets. The euro was seen at $1.5676.

European Central Bank policymaker comments on excessive volatility in currency exchange rates added fuel to fire, triggering a sell-off in the single European currency.

Oil and other dollar-denominated commodities came under pressure after data showed US jobless claims down sharply last week, boosting the dollar by more than 1 per cent against a basket of major currencies.

Gold, copper and agricultural products also fell as the dollar gained.

Prices retreated as the market expected a rise in gasoline output from refineries in the United States, the world's No. 1 energy user, to meet peak driving demand.

US government data on Wednesday showed refinery utilization rates jumped by 4.2 per centage points to 85.6 per cent of capacity.

But the summer driving season, starting from late May, is expected to see weaker gasoline demand compared with previous years due to an overall sluggish US economy.

Production disruptions in Nigeria helped moderate oil's pullback, and a planned two-day strike at a Scottish refinery that could affect 700,000 barrels per day of North Sea crude supplies also supported oil.

Talks to resolve a pension dispute at the 200,000 bpd Grangemouth refinery collapsed late on Wednesday, and union officials said the work stoppage will proceed on Sunday.

The refinery has been closing gradually over the last week and its power station, which also supplies BP's nearby Kinneil Forties crude oil processing plant, is due to shut on Saturday.

Rebel attacks have shut 169,000 bpd of Royal Dutch Shell in Nigeria. In Libya, 45,000 bpd of Libyan offshore oil production had been halted due to a technical problem and could be offline for a few weeks. (Reuters)
 
 
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