AP: Oil falls in Europe midday after hitting two-year high as dollar strengthens, stocks sag
LONDON (AP) - Oil prices fell slightly Wednesday after reaching a two-year high the day before, as the dollar regained strength and stock markets sagged.
By early afternoon in Europe, benchmark oil for December delivery was down 9 cents to $86.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 34 cents to settle at $86.72 a barrel on Tuesday.
A weaker dollar helped propel oil to $87.63 a barrel during trading Tuesday, the highest level since October 2008, when the global financial crisis was unfolding. The gains unwound a little later on as the dollar's weakness relented.
The dollar continued to strengthen on Wednesday morning, pushing the euro below $1.38 on worries about the debt woes of eurozone countries, especially Ireland, where investors drove the interest rate on the country's 10-year bonds to a new high.
Since commodities are priced in dollars, a weaker dollar means they become more affordable for buyers who use other currencies.
Stocks, which generally move in the same direction as oil prices, also fell. France's CAC 40, Germany's DAX and Britain's FTSE 100 were all down.
Investors are also anticipating a report on stockpiles from the U.S. Energy Department's Energy Information Administration — the market benchmark.
Data for the week ending Nov. 5 is expected to show an extra 2.1 million barrels in crude oil stocks and a fall of 1.3 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Oil and other energy prices had been climbing for weeks as traders took advantage of a weaker dollar stemming from the Federal Reserve's multibillion dollar bond-buying program designed to revitalize the economy.
Many analysts think oil could top $90 a barrel by the end of the year. One thing holding back a stronger rally are still-plentiful supplies of oil and gasoline and muted demand.
The International Energy Agency has predicted global energy consumption will rise 36 percent to 16.7 billion metric tons of oil equivalent by 2035.
China's demand will jump 75 percent, which will account for more than a third of increase in energy use, the IEA predicted in its annual World Energy Outlook.
