BLBG: Oil Falls as Dollar Increases to Three-Month High Against Euro
By Ann Koh
Dec. 17 (Bloomberg) -- Oil fell in New York as the dollar strengthened against the euro, paring gains made yesterday after a government report showed a decline in fuel supplies in the U.S.
Oil dropped as the dollar rose to a three-month high against the euro amid signs that the U.S. recovery is gaining momentum. The Federal Reserve said yesterday the economy is strengthening and deterioration in the labor market is abating. A stronger dollar makes commodities less attractive to investors as a hedge against inflation.
“If dollar keeps as strong then crude might be lower,” said Clarence Chu, a trader with options dealers Hudson Capital Energy in Singapore. “But crude could turn around later today, there’s no clear trend.”
Crude oil for January delivery fell as much as 43 cents, or 0.6 percent, to $72.23 a barrel in electronic trading on the New York Mercantile Exchange. It was at $72.26 at 11:58 a.m. Singapore time. Yesterday, the contract rose $1.97 to $72.66. Futures dropped as far as $68.59 this week, the lowest point in a nine-day decline.
The dollar rose to $1.4405 per euro, the highest since Sept. 8, as of 12:31 p.m. in Tokyo from $1.4531 in New York yesterday.
Supplies of crude oil fell 3.69 million barrels last week to 332.4 million. They were expected to decline by 2 million barrels, according to the median of 17 estimates in a Bloomberg News survey.
Imports of crude oil in the U.S. declined 365,000 barrels to 7.77 million barrels a day, the Energy Department report showed. It was the lowest since September 2008, when ports were shut because of hurricanes Gustav and Ike.
Refinery Rates
Refineries operated at 79.9 percent of capacity last week, down 1.1 percentage points from the prior week, the report showed. Analysts surveyed by Bloomberg News forecast a 0.3 percentage point gain.
Gasoline inventories gained 879,000 barrels to 217.2 million barrels last week. They were forecast to rise 1.25 million barrels, based on the median estimate of 18 analysts in the Bloomberg survey.
Brent crude for February delivery was at $74.00 a barrel, down 29 cents, at 11.57 a.m. Singapore time. The January contract, which expired yesterday, rose $1.50, or 2.1 percent, to settle at $73.55 a barrel on the London-based ICE Futures Europe exchange.
To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net
