Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Money / Oil falls under $85 on demand concern, dollar
BackBack

Oil falls under $85 on demand concern, dollar

Oil falls under $85 on demand concern, dollar

Premium

Singapore: US crude dropped to below $85 on Friday as concerns about US demand re-emerged and the dollar strengthened, making imports more expensive for emerging economies where consumption is surging.

An unexpected jump in the weekly number of US workers filing new jobless benefit claims tempered sentiment across markets on Thursday.

“We had slightly disappointing weekly jobless claims numbers that triggered some caution in the oil market," said Toby Hassall, an analyst at CWA Global Markets Pty Ltd in Sydney.

US crude for May delivery fell 67 cents to $84.84 a barrel by 8:46am, more than $2 lower than an 18-month high above $87 reached last week. The dollar gained more than 0.1% against a basket of currencies.

The dollar found support after the Treasury Department said foreign purchases of US securities rose in February as strong private sector demand helped reverse an overall capital outflow suffered during the prior month.

“A firmer dollar today is probably a factor weighing on prices. High inventories of crude in the United States reflect the fact that the fundamentals are still soft; we are still seeing oversupply," Hassall said.

For a technical outlook on US crude, click

Strong economic data out of China painted a different outlook for demand across Asia, giving relative support to prices of London-traded ICE Brent crude, the benchmark for most of the oil produced in Europe, Africa and Asia.

Soaring growth in the Chinese economy, which posted annual expansion of 11.9% in the first quarter, could prompt a revaluation of the yuan, which may boost oil demand by increasing China’s buying power.

Front-month Brent reached 18-month highs on Thursday. The June contract, which became the front month overnight after May expired, was trading about $1 higher than the equivalent contract for US crude on Friday, shedding 39 cents to $87.20.

May Brent settled at $87.17 on Thursday, the highest close since front-month Brent ended at $90.25 on 3 October, 2008. Brent’s $87.58 intraday peak was the highest since $87.99 was struck on 7 October, 2008.

A strike by Gabon’s main oil union has cut about 60% of the African nation’s 250,000 barrels per day of crude production, which competes with Brent.

On the other hand, the expiration of May US crude oil options helped restrain US prices on Thursday, traders said. Barclays Capital’s technical team said in a note to clients that a corrective phase that had dominated the last week or so of oil trading was now over and the next targets were significantly higher.

“Following five days of modest lower closes, Brent crude is pressuring the top of a bullish flag-like pattern," Barclays Capital said. “Brent is ready to test $88.15 per barrel, then $90.00."

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 16 Apr 2010, 08:55 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App