Singapore: Oil prices dropped Friday, 15 February, after rising more than $2 a barrel in the previous session as new US trade deficit figures spurred hopes that the US economy might escape a serious downturn.
The US Commerce Department said Thursday the trade deficit fell in December and for 2007 as a whole — an indication the US is exporting more goods. This led investors to think US energy demand would not be as weak as feared.
US Federal Reserve Chairman Ben Bernanke’s suggestion the central bank is prepared to again cut interest rates also helped boost light, sweet crude to settle at $95.46 a barrel Thursday, up $2.19 on the New York Mercantile Exchange.
That was its highest close since 9 January. The contract has risen in 4 of the past 5 sessions, adding more than $6 in a little over a week.
On Friday, the March contract lost 37 cents to $95.09 a barrel in Asian electronic trading by midday in Singapore.
Bernanke said the Fed is ready to act again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Energy investors were also buying after a federal judge’s decision Wednesday to confirm an earlier ruling freezing $300 million (€205 million) in a bank account owned by the Venezuelan state oil company.
Exxon Mobil is challenging Venezuela’s nationalization of an oil project. A British court’s earlier decision to temporarily freeze $12 billion (€8.2 billion) in Venezuelan oil assets drew threats from President Hugo Chavez to cut off oil sales to the US.
Weighing on oil prices were forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, that call for slower demand growth this year due to weakening economies.
Heating oil futures dropped 1.11 cents to $2.6555 a gallon (3.8 liters) while gasoline prices declined 0.61 cent to $2.47 a gallon.
Natural gas futures lost 1.3 cents to $8.759 per 1,000 cubic feet.
Brent crude futures fell 26 cents to $94.83 a barrel on the ICE Futures exchange in London.