Paula Dittrick
Senior Staff Writer
HOUSTON, Apr. 2 -- The front-month contract for benchmark US sweet, light crude oil declined for a second consecutive day Apr. 1, dipping to $99.55/bbl on the New York Mercantile Exchange before rebounding to settle at $100.98/bbl.
It was the first time since Mar. 25 that oil prices dropped below $100/bbl on NYMEX. Analysts attributed the decline to a strengthening US dollar against the euro.
Commodities become less attractive to investors when the dollar strengthens. A weakening dollar earlier this year made energy more appealing to investors as a hedge against inflation.
Analysts are concerned about the US economy. On Mar. 28, the US Department of Commerce reported consumer spending was flat in February after adjusting for inflation. Spending increased by 0.1%—the third consecutive month of weak consumer demand.
Real consumer spending has risen less than 0.1% seasonally adjusted since November, a sign of stalling economic growth that is likely to dampen oil demand.
Some analysts are uncertain regarding the future direction of oil prices, saying they expect the US Federal Reserve will cut interest rates several times this year. Lower interest rates tend to weaken the dollar.
Energy prices
The NYMEX June contract, meanwhile, for sweet, light crudes lost 59¢ to $100.50/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 61¢ to $100.98/bbl.
The May contract for reformulated blend stock for oxygenate blending (RBOB) rose by 1.21¢ to $2.6392/gal on NYMEX. The May heating oil contract fell 2.64¢ to $2.8797/gal.
The May natural gas contract fell by 37.7¢ to $9.724/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., plunged 91¢ to $9.03/MMbtu.
In London, the May IPE contract for North Sea Brent crude lost 13¢ to $100.17/bbl. The April gas oil contract lost $42 to $927/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 13 reference crudes dropped $2.88 to $95.75/bbl on Apr. 1.
Contact Paula Dittrick at [email protected].
