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18 July 2024

Oil falls to $108 as dollar stays off lows

By Agencies

Oil fell $1 on Wednesday to around $108 (Dh396.36) a barrel, paring the 3.5 per cent jump a day earlier as the dollar kept above 13-year lows, and ahead of US data expected to show rising stockpiles of crude and gasoline.


US crude for April delivery, which expires at the end of Wednesday's session, dropped $1.09 at $108.33 a barrel by 0445 GMT.


On Tuesday, US crude settled up $3.74. It had hit a record-high of $111.80 on Monday.


May London Brent crude fell $1.08 at $104.48 a barrel.


"We are seeing a correction on late Tuesday surges, which came following the FOMC decision, which led to the buying of the dollar and in US stocks," said Ken Hasegawa, manager of commodity derivatives sales at broker Newedge in Tokyo.


Oil prices have jumped about 13 per cent so far this year in part because of a steep decline in the US dollar, a factor that has supported the nominal value of all commodities priced in the currency.


The dollar eased on profit-taking a day after posting its biggest one-day gain against the yen in a decade following the Federal Reserve's move to cut its benchmark rates by 75 basis points to 2.25 per cent, a smaller-than-expected reduction. The dollar held well above recent lows hit against other currencies.


The Fed announcement also drove up US stocks to their biggest one-day gain in more than five years.


Oil also came under pressure due in part to the risk that an economic downturn could damage underlying demand.


Traders focused on the latest oil inventory data in top consumer the United States. The US Energy Information Administration's oil inventory report is due at 10:30am EDT (1430 GMT) on Wednesday.


An expanded Reuters poll of analysts showed an average forecast for a 2.3 million-barrel rise in crude stocks, a 1.5 million-barrel decline in distillates and a 400,000-barrel rise in gasoline inventories last week.


"The data may give an instant impact to the oil price, but will not change the overall picture," Hasegawa said. "The dollar's moves and the economic indicators will likely sway the oil market." (Reuters)