WP:Oil falls below $99 in Europe on stronger dollar, mixed signs on US economy
Oil prices fell below $99 a barrel Wednesday as traders eyed mixed signs about the strength of the U.S. economy and crude demand and the dollar gained on the euro and the yen.
By early afternoon in Europe, benchmark oil for July delivery was down 43 cents to $98.94 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $2.07 to settle at $99.37 on Tuesday.
In London, Brent crude for July delivery was down $1.36 to $118.80 a barrel on the ICE Futures exchange.
Crude has zigzagged near $100 since falling from $115 in early May as investors mull signs of a sluggish U.S. economy.
Excluding car sales, U.S. retail sales rose 0.3 percent last month, better than analysts expected. However, gasoline sales were down 1 percent last week from a year ago, according to the latest survey by MasterCard SpendingPulse.
“The report demonstrates that consumers continue to feel the pain of gasoline prices above the $3.50 per gallon mark,” energy consultant The Schork Group said in a report.
Some analysts expect growing crude demand from developing countries will offset weak consumption in richer nations. Oil will likely trade sideways for the next three to six months before rising to finish this year near $120, Bank Sarasin said in a report.
“While demand is softening in the U.S. due to high prices and the economic slowdown, in recent months global demand has remained strong because of countries such as China and India,” Sarasin said.
The American Petroleum Institute said late Tuesday that crude inventories fell 3.0 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 1.9 million barrels.
Inventories of gasoline rose 1.1 million barrels last week while distillates fell 426,000 barrels, the API said.
The Energy Department’s Energy Information Administration reports its weekly supply data — the market benchmark — later Wednesday.
A stronger dollar also put pressure on oil prices by making crude more expensive for investors holding other currencies.
The euro was down to $1.4298 on Wednesday from $1.4468 late Tuesday in New York and the dollar strengthened to 80.67 yen from 80.52 yen.
In other Nymex trading in July contracts, heating oil lost 2.42 cents to $3.1016 a gallon while gasoline fell 3.16 cents to $3.033 a gallon. Natural gas futures slid 1.9 cents to $4.562 per 1,000 cubic feet.
