BLBG: Crude Oil Declines for First Time in Four Days as Dollar Gains
By Rachel Graham
Nov. 19 (Bloomberg) -- Crude oil fell for the first time in four days as the dollar gained against the euro, dulling the appeal of commodities as a currency hedge.
Oil fell after reaching a one-week high yesterday as the U.S. Department of Energy said crude stockpiles dropped unexpectedly last week. Stock markets fell today across Europe on concern that this year’s rally has outpaced the prospects for economic growth.
“When the dollar is strong and equities are lower, then the oil market goes lower too,” Frank Schallenberger, head of commodities research at Landesbank Baden-Wuerttemberg, said by phone from Stuttgart. “It’s unusual to be stuck so long in a range” between $75 and $80.
Crude oil for December delivery dropped as much as 82 cents, or 1 percent, to $78.76 a barrel in electronic trading on the New York Mercantile Exchange and traded at $79.22 a barrel at 2:05 p.m. London time. The contract expires tomorrow. The more actively traded January contract was at $79.65.
Crude oil traded above $80 a barrel yesterday for the first time since Nov. 11 after the Department of Energy data showed crude inventories declined 887,000 barrels to 336.8 million last week. Stockpiles were forecast to increase 300,000 barrels, according to a Bloomberg News survey of analysts.
U.S. crude stockpiles are currently about 5 percent above the same level last year, almost a year after the Organization of Petroleum Exporting Countries agreed production cuts.
Stocks High
“OPEC production has fallen a lot in the last 15 months, and the stocks still remain high,” Schallenberger said. For that reason, yesterday’s drop in inventories was only mildly positive, he said.
The dollar rose as high as $1.4843 against the euro from $1.4963 yesterday.
Brent crude oil for January settlement dropped as much as 79 cents, or 1 percent, to $78.68 a barrel on the London-based ICE Futures Europe exchange and traded at $79.19 as of 2:03 p.m. local time.
To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net.
