Commodity Corner: Crude Drops as Dollar Strengthens
Light, sweet crude futures fell below $89 a barrel Thursday as the dollar strengthened against the euro.
Oil for February delivery settled at $88.38 a barrel—$1.92 lower than the previous trading session. The dollar rose to a one-month high Thursday against the euro. Investors believe the greenback strengthened prior to Friday’s payroll report predicting that the U.S. economy is recovering. A stronger dollar curbs the appeal of commodities, making it more expensive for buyers using foreign currencies.
The number of unemployment claims filed by Americans in the week ended Jan. 1 grew by 18,000 to 409,000, according to the U.S. Labor Department. The average number of benefits claimed was less over the past month—a sign that the market is improving.
Additionally, rumors that the U.S. will withdraw stimulus measures, which would boost the dollar, further triggered oil prices.
The intraday range for Thursday was $87.85 to $90.71 a barrel.
Natural gas futures dropped for a second day Thursday. Prices declined by 3.9 cents settling at $4.43 per thousand cubic feet. Front-month natural gas futures fluctuated between $4.38 and $4.62 Thursday.
Above-average decline in gas stockpiles and warmer weather forecasts hindered expectations for gas demand. Natural gas in U.S. storage was 3.097 trillion cubic feet for the week ended Dec. 31. The Energy Information Administration reported that natural gas inventories for last week was 135 billion cubic feet (bcf), compared to the five-year average for that week of 79 bcf.
Reformulated gasoline blendstock settled at $2.44 a gallon Thursday, after peaking at $2.47 and bottoming out at $2.42.