Oil prices hesitate on stronger dollar
NEW YORK, USA — OIL prices moved between small losses and small gains yesterday, as the dollar got a little stronger and stocks wavered after disappointing earnings reports and lower home prices.
Benchmark crude for December delivery rose 15 cents to US$82.67 a barrel in midday trading on the New York Mercantile Exchange.
Slight gains by the dollar against the euro made crude priced in dollars more expensive for investors holding other currencies.
“It seems that the US dollar continues to be strongly correlated with the oil market, as the recent US dollar weakness has helped oil prices to remain fairly strong above US$80 per barrel area, amid these fragile economic conditions,” said analysts at Sucden Financial in London.
Stock markets were lower in late-morning trading. A surprise loss at US Steel for the third quarter and concern about weak demand for steel used in cars, appliances and housing drove down steelmaker shares.
The housing market remains anaemic in most parts of the country. Home prices fell in 15 of 20 cities measured in the Standard & Poor’s/Case-Shiller index for August. Consumer confidence in the economy improved a bit this month from September, but remained weak.
The Energy Department releases its weekly reading on petroleum inventories today. In a note to investors, energy consultants MF Global said an expected rise in stockpile levels because of slowing fuel demand is putting downward pressure on prices.
Analysts think crude inventories grew by 1.5 million barrels last week, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Gasoline and distillate stocks — diesel and heating oil — are also expected to rise.
“While the numbers could bring some surprises this week, one week’s report will not change a continued bearish supply-usage situation as large supply surpluses will remain intact,” energy consultants Ritterbusch and Associates said in a report.
Crude will likely hover above US$80 at least until the Federal Reserve says what measures it will take to spur US economic growth at its meeting on November 2 and 3.
