Oil falls below $112 on dollar, US demand, Nigeria

Oil falls below $112 on dollar, US demand, Nigeria
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First Published: Fri, May 02 2008. 12 18 PM IST
Updated: Fri, May 02 2008. 12 18 PM IST
Perth: Oil fell for the fourth session in a row, slipping below $112 a barrel on Friday, pressured by a firm dollar, easing supply worries in major crude exporter Nigeria, and concerns that demand in United States will slow.
US light crude for June delivery fell 57 cents to $111.95 a barrel by 0528 GMT, bringing total losses from a record high of $119.93 struck this week to more than 6%.
London Brent crude fell 48 cents to $110.02.
The dollar was steady near a two-month high against a major currency basket on Friday after US economic data reinforced expectations the Federal Reserve will keep interest rates on hold for a while.
Oil has fallen from record peaks as demand in No.1 consumer, the United States, wanes on the back of surging fuel costs and wider economic woes.
Analysts said a strengthening dollar remains the main downside risk for oil prices, which could fall to low $100 levels a barrel should the dollar gain more ground.
“We expect that this recent reversal of fortunes for crude oil prices may continue to hold for a few more weeks at least, with great volatility, guessing that there may be a mini-rally for the dollar in the works,” First Energy Capital said in a research note on Friday.
The resumption of crude supplies from Nigeria and the North Sea also weighed on prices.
Exxon Mobil Corp said it had reached a deal with a Nigerian oil union to end an eight-day strike which had shut down the company’s 800,000 barrel-per-day output in Nigeria and that it was resuming production.
In Britain, the main crude processing unit at the Grangemouth refinery resumed production and the diesel-making hydrocracker is due to restart this weekend.
Data showed gasoline use in California — the biggest US market for the fuel — fell 4.5% in January from a year ago, the state Board of Equalization said Thursday.
The data came a day after the US Energy Information Administration’s report issued this week showed February US oil demand fell 1.5 million barrels per day from a year earlier.
Analysts said traders will scrutinize the US labour Department’s April employment report due at 1230 GMT for more clues on how the U.S. economy is fairing.
Economists in a Reuters survey expect 80,000 jobs were lost in the month, a repeat of the March loss. The unemployment rate is seen at 5.2%, versus 5.1% in March.
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First Published: Fri, May 02 2008. 12 18 PM IST