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Oil slides as dollar strengthens

Jan 07 2011 09:47 AFP

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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.

dollar  |  commodities  |  markets  |  oil

 

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