BLBG: Crude Oil Falls a Second Day as Dollar Gains, Equities Drop
By Mark Shenk
Nov. 20 (Bloomberg) -- Crude oil fell for a second day as the dollar strengthened against the euro and global equity markets declined.
Oil slipped as much as 1.6 percent as the U.S. currency advanced for the third time in four days. Stocks and equity futures retreated after European Central Bank President Jean- Claude Trichet said policy makers will withdraw emergency cash gradually to avoid fueling inflation, and Dell Inc.’s earnings trailed analysts’ estimates.
“We will take oil prices down another notch because of the strengthening dollar,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, consultant. “Things are bearish everywhere you look.”
Crude oil for December delivery fell $1.20, or 1.6 percent, to $76.26 a barrel at 9:11 a.m. on the New York Mercantile Exchange. Prices are little changed this week and 71 percent higher this year.
The December contract expires today. The more actively traded January contract fell $1.09, or 1.4 percent, to $76.96 a barrel.
Oil dropped 2.7 percent yesterday as the greenback gained and on concern the rally in commodities and equities has outpaced the prospects for economic growth.
The U.S. currency strengthened 0.6 percent against the euro to $1.484, from $1.4925.
“What oil does next depends on U.S. equities and the dollar,” Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt, said by phone. “Fundamentally, the oil price can’t be justified at current levels.”
Lower Demand
Total U.S. daily fuel demand averaged 18.6 million barrels in the past four weeks, down 4.1 percent from a year earlier, according to an Energy Department report on Nov. 18.
“Demand is recovering, but it is painfully slow,” said Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington. “The sectors of the economy that are recovering aren’t the energy intensive ones. It could be six months from now before you get consistently positive year-on-year demand numbers.”
Brent crude oil for January settlement declined 87 cents, or 1.1 percent, to $76.77 a barrel on London’s ICE Futures Europe exchange.
Analysts surveyed by Bloomberg News were split over whether crude oil prices will fall or be little changed next week. Ten of 27 analysts, or 37 percent, said futures will drop through Nov. 27. Ten respondents predicted that oil will be little changed. Seven said futures will rise.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
