Commodity Corner: Oil Rallies As Dollar Slides
The U.S. Dollar continued to lose ground against other currencies and oil continued to rally Thursday.
Crude oil for June delivery settled at $112.29 a barrel, gaining 84 cents from the previous day. Oil has rallied this week as the greenback has weakened against other major currencies. A key contributor to the dollar's recent fall was Standard & Poor's announcement Monday that it was revising its long-term U.S. debt outlook from stable to negative.
Since Monday, the euro has strengthened more than two percent against the dollar. In such a case where the dollar weakens against other currencies, oil and other commodities tend to rally because they become a better value for investors holding these other currencies.
Crude oil traded within a range from $111.00 to $112.48 Thursday.
Natural gas also ended the day higher after the U.S. Department of Energy announced a smaller-than-expected increase in the country's natural gas inventories. The federal agency's Energy Information Administration reported that natural gas stocks rose by 47 billion cubic feet last week; analysts had expected a higher increase. A Platts survey of analysts, for instance, had anticipated a build of 49 to 53 Bcf week-on-week.
Given the EIA data, May natural gas increased by a dime to settle at $4.41 per thousand cubic feet Thursday. Gas peaked at $4.42 and bottomed out at $4.27.
May gasoline gained three cents to end the day at $3.31 a gallon. It fluctuated from $3.26 to $3.32 during Thursday's session.