BLBG: Crude Oil Falls as Dollar Reaches Three-Month High Against Euro
By Nidaa Bakhsh and Ann Koh
Dec. 17 (Bloomberg) -- Crude oil fell for the first time in three days as the dollar strengthened against the euro, limiting the appeal of commodities as a currency hedge.
Crude gained as the dollar rose to a three-month high against the euro as Greece’s latest debt downgrade fanned concern that spiralling national debts may hamper the global economic recovery. The U.S. currency also gained after the Federal Reserve said yesterday the economy is strengthening and the deterioration in the labor market is abating.
“It is the dollar mainly because even though the Fed kept interest rates unchanged they did admit things are stabilizing in the U.S. economy,” said Andrey Kryuchenkov, a VTB Capital analyst in London. “Sentiment in the dollar is turning positive.”
Crude oil for January delivery fell as much as $1.01, or 1.4 percent, to $71.65 a barrel in electronic trading on the New York Mercantile Exchange. It was at $71.89 a barrel at 1:02 p.m. London time.
Yesterday, the contract added $1.97 to $72.66 in New York, the biggest gain in a month, after the Energy Department said U.S. crude inventories declined to the lowest since the week ended Jan. 9. Prices have gained 61 percent this year.
The dollar advanced against all 16 of its most-traded counterparts, strengthening to $1.4341 per euro at 1:04 p.m. in London, from $1.4531 in New York yesterday.
Crude Stockpiles
U.S. crude stockpiles fell 3.69 million barrels last week to 332.4 million, more than a median 2 million-barrel drop forecast by analysts in a Bloomberg News survey. Distillate supplies, a category that includes heating oil and diesel, fell 2.95 million barrels to 164.4 million as output declined.
Refineries operated at 79.9 percent of capacity last week, down 1.1 percentage points from the previous week, the report showed. Analysts polled by Bloomberg News predicted a 0.3 percentage point gain.
“The crude draw is more than people expected,” said Clarence Chu, a trader with options dealers Hudson Capital Energy in Singapore. “If you look at refinery runs, they’re down more than 1 percent. That shows refiners aren’t turning crude into products.”
An estimate of oil consumption in China, the world’s second-largest energy user, fell last month, according to a newsletter published by the official Xinhua News agency.
China’s apparent demand for crude oil was 32.4 million metric tons in November, slipping from a record 33.4 million tons in October, China Oil, Gas & Petrochemicals said citing data from the National Bureau of Statistics.
In Japan, Idemitsu Kosan Co., the country’s second-largest refiner, may close refineries and cut capacity because of the global oversupply of oil products, company chairman Akihiko Tembo said today.
Brent crude oil for February settlement fell as much as 96 cents, or 1.3 percent, to $73.33 a barrel on the London-based ICE Futures Europe exchange. The contract was at $73.50 a barrel at 1:06 p.m. London time.
To contact the reporter on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net.
