Crude futures plunged $1.56 Thursday as a stronger dollar and higher natural gas inventories caused energy prices to stagnate.
Oil prices have recently been supported by the dollar-euro connection—a weaker dollar means an increase in crude prices. When the dollar weakens, dollar-based commodities become cheaper for traders with foreign currencies. Rebounding from an 8-month low, the greenback rose against the euro sending crude prices lower Thursday.
Light, sweet crude settled at $81.67 a barrel on the New York Mercantile Exchange Thursday, after peaking at $84.43 and plummeting to $81.00.
According to the Energy Information Administration (EIA) on Wednesday, U.S. crude inventories rose to 360.9 million barrels for the week ended Oct. 1—13 percent higher than the five-year average for the period. The EIA also reported a 6.4 percent drop in fuel consumption, the highest decline since Feb. 27, 2004. Analysts deem the oversupply in crude quite bearish.
Henry Hub natural gas for November delivery fell to its lowest since Sept. 2009, settling at $3.62 per thousand cubic feet. The 25-cent drop came on reports of record-level storage builds.
Natural gas inventories increased by 85 billion cubic feet to 3.499 trillion cubic feet last week, as reported by the EIA on Thursday. Gas in U.S. storage hit an all-time high in November 2009 at 3.837 trillion cubic feet.
Natural gas fell to a 52-week low of $3.61 during Thursday's trading session and peaked at $3.89.
Front-month contract RBOB gasoline also settled four cents lower at $2.12 a gallon Thursday, after trading between $2.105 and $2.20.
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