Nymex Crude Drops 0.8% to Fresh 2013 Low
U.S. crude futures fell Thursday as a rising U.S. dollar and concerns about high domestic supplies pushed prices to the lowest level since last year.
Light, sweet crude for April delivery settled 71 cents, or 0.8%, lower at $92.05 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange for April delivery traded 72 cents lower at $111.15 a barrel.
Oil prices this week have been driven lower by tumbling gasoline futures, according to analysts and traders. But on Thursday, a brief rebound in March gasoline prices ahead of the contract's expiration was outweighed by a rising dollar.
"There is some very explosive upside potential in the U.S. dollar here," said Walter Zimmermann, an analyst at United-ICAP. "That goes a long way to explaining why oil has been taking a nosedive."
Oil is traded in U.S. dollars, so any increase in the dollar can push down oil prices by making crude more expensive in other currencies. The euro was recently down 0.6% to $1.3065, compared with Wednesday.
The slumping dollar comes as investors grow nervous about high U.S. oil stockpiles and the potential for rising retail gas prices to result in lower fuel usage. Refineries are returning to service after a period of seasonal maintenance. While that typically means higher oil demand ahead, domestic crude stockpiles are well supplied, which should keep a lid on futures.
"Fresh lows still appear likely," in oil and fuel prices, according to Jim Ritterbusch, head of oil-trading adviser Ritterbusch and Associates.
On Wednesday, the U.S. Energy Information Administration said U.S. oil stockpiles rose 1.13 million barrels to 377.5 million barrels last week. While the increase was lower than analysts anticipated, it sent stocks to the highest level since last July and the highest ever for this time of year, according to EIA records dating to 1982.
After pushing to nearly $98 a barrel in late January, oil futures have retreated over the past month and are now just 0.2% higher for the year. Despite the rally in U.S. stock markets this year, which often helps pull crude-oil higher, traders have been focused on the tepid global demand outlook and signs that there are plenty of supplies.
Front-month March reformulated gasoline blendstock, or RBOB, settled 5.81 cents, or 2%, higher at $2.9146 a gallon. The March fuel contracts expired at settlement Thursday, and the more heavily traded April gasoline futures settled 0.2% higher at $3.1117 a gallon.
March heating oil futures settled 0.5% lower at $2.9719 a gallon.
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