Oil Down 2%, Strong Dollar Knocks US Crude Off 15-Month Highs
NEW YORK, Oct 20 (Reuters) - Oil prices settled down more than 2 percent on Thursday, as a resurgent dollar encouraged players to take profit on the previous day's rally that sent U.S. crude to 15-month highs.
The dollar hit seven-month highs against a basket of currencies and a three-month peak versus the euro after the European Central Bank kept interest rates unchanged and U.S. data showed home resales surged in September.
Benchmark Brent crude for December delivery settled down $1.29, or 2.5 percent, at $51.38 per barrel.
U.S. West Texas Intermediate (WTI) crude's November contract , which expired as the front-month, fell $1.17, or 2.3 percent, to finish at $50.43. WTI's December contract, which will be front-month from Friday, slid $1.19 to settle at $50.63.
On Wednesday, oil rallied after the U.S. government reported an unexpected drawdown of more than 5 million barrels in weekly crude stockpiles that drove WTI's November contract to a 15-month high of $51.93.
"This is predominately being driven by the dollar's strength," Matt Smith, director of commodity research New York's ClipperData said, referring to Thursday's retreat.
"It's also to do with the dust settling on yesterday's report and the realization that it wasn't quite as bullish."
Some market participants noted that despite the crude drawdown, the EIA also reported an unexpected build of 2.5 million barrels in gasoline stockpiles instead of the drop that was forecast.
There was also growing skepticism about the Organization of the Petroleum Exporting Countries' (OPEC) upcoming plan to limit production, said Tariq Zahir, trader at Tyche Capital Advisors in New York.
"The comments overnight, of (OPEC) talking with Russia about whether they can increase their production levels, is putting into doubt whether there is going to be an agreement," he said.
The chief executive of Russia's Rosneft has said the state oil producer has potential to add as much as 200 million tonnes a year, or about 4 million barrels per day, to its output.
Despite Thursday's drop, oil prices are still up about 13 percent since OPEC announced on Sept. 27 its first planned output cut in 8 years to rein in a global glut that halved prices from mid-2014 highs above $100 a barrel.
French oil industry officials differed in their market outlook at a conference in Paris, with Total's CEO optimistic of OPEC's ability to balance the market with output cuts while Technip's head suggested the oil price crisis will last another two years.
(Additional reporting by Barani Krishnan in NEW YORK and Sabina Zawadzki in LONDON; Editing by William Hardy, Alistair Bell and David Gregorio)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds