Fin24

Oil slides as dollar strengthens

2011-01-07 09:47

Singapore - Oil prices were down in Asian trade on Friday as a stronger dollar made the commodity more expensive and doubts emerged over sustained energy demand in the United States, analysts said.

New York's main contract, light sweet crude for February delivery, fell three cents to $88.34 per barrel, losing earlier gains.

Brent North Sea crude for February eased 76 cents to $93.76.

"Current market sentiment focus a lot on the US dollar movement," said Victor Shum, senior principal at Purvin and Gertz international energy consultants in Singapore.

"The US dollar strengthening against the euro has put downward pressure on oil prices."

Apart from the stronger dollar, the declines were also put down to "weaker jobless claims and retail sales data" in the United States which "raised doubts on US oil demand prospects", the Commonwealth Bank of Australia said in a report.

Investors were flocking to the US currency as a safe haven because of worries over the prospects of the euro, according to analysts.

The European single currency dropped against the dollar in Asia on Friday, dragged by lingering worries about eurozone sovereign debt problems and amid rising hopes for the US recovery, dealers said.

A stronger greenback makes dollar-priced commodities such as crude oil more expensive for investors, dampening demand and leading to lower prices.

Comments
  • Dr P van der Dussen - 2011-01-07 14:05

    Dit spreek vanself dat die Dollar-olieprys skynbaar daal wanneer die Dollar verstewig - en omgekeerd. In werklikheid i die olieverkopers dan met minder Dollar tevrede omdat hulle met minder Dollar dieselfde hoeveelheid goedere elders kan koop. Die omgekeerde geld as die Dollar verstewig. Netso is die beweging van die Rand teenoor die Dollar hoegenaamd nie 'n teken van 'n sterk of swak Rand nie, maar teenoorgestelde bewegings van die Dollar se beweging teenoor ander geldeenhede wat van belang is soos die Euro en die Jen en die Yuan. Die Rand is maar 'n klein druppeltjie aan die internasionale reuse-geldemmer en loop maar soos die grotes voorskryf. Dit word tyd dat die besluitnemers en die media hierdie werklikhede erken in plaas van bewerings te maak asof die Rand internasionaal belangrik is.

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