MARKET WATCH: Oil price drops on strengthening dollar
Oil prices declined for a third consecutive day May 1 upon news of the US dollar surging in value against other currencies and upon the end of an oil workers' strike in Nigeria.
By OGJ editors
HOUSTON, May 2 -- Crude oil prices declined for a third consecutive day May 1 upon news of the US dollar surging in value against other currencies and upon the end of an oil workers' strike in Nigeria.
Sweet, light crudes closed at their lowest settlement price in more than 2 weeks on the New York Mercantile Exchange.
Recovery of the dollar came upon reports of strong US manufacturing data, economists said. Meanwhile, the euro and the yen both declined. The Federal Reserve indicated it was willing to moderate interest rate cuts, which also will boost the dollar.
Negotiators for ExxonMobil Corp. reached agreement with Nigerian oil workers who had been on strike for 8 days.
Deutsche Bank analyst Adam Sieminski issued a May 2 research note saying he believes oil market fundamentals remain tight.
Sieminski sees the Organization of Petroleum Exporting Countries "in a powerful position" because of continuing demand growth in countries outside the Organization for Economic Cooperation and Development combined with an oil supply slowdown in the OECD and former Soviet Union.
The June contract for benchmark US sweet, light crudes dropped 94¢ to $112.52/bbl May 1 on NYMEX. The July contract lost 93¢ to $111.80/bbl. On the US spot market, West Texas Intermediate at Cushing was down 94¢ to $112.52/bbl.
Heating oil for June delivery dropped 4.03¢ to $3.117/gal on NYMEX. The June contract for reformulated blend stock for oxygenate blending (RBOB) slipped by 2.81¢ to $2.878/gal.
The June natural gas contract dropped 28.2¢ to close at $10.51/MMbtu on NYMEX. On the US spot market, gas at Henry Hub in Louisiana, fell 9¢ to $10.57/MMbtu.
In London, the June IPE contract for North Sea Brent crude lost 86¢ to $110.50/bbl. Gas oil for May dropped $26.50 to $1,046.75/tonne.
The average price for the OPEC's basket of 13 reference crudes dropped $1.20 to $106.13/bbl on May 1.