By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures traded sharply lower Friday, felled by the double-whammy of a rising dollar and collapsing stocks not even a storm in the Gulf of Mexico could prevent.
Crude for October delivery CL1V -3.21% retreated $3.25, or 3.6%, to $85.81 a barrel on the New York Mercantile Exchange. Oil has settled in the red for three of the past four sessions.
Losses mounted for oil and most other commodities as U.S. equities took a nosedive following news a German member of the European Central Bank had resigned.
Governing Council member Juergen Stark stepped out because of disagreements over the bank’s bond-buying program. His exit served as a painful reminder of the divisions still ripping through the 17-nation euro zone and looming sovereign-debt crisis.
There are concerns the European crisis “is getting worse, not better, and the U.S. economy is not strengthening,” said Peter Beutel, with trading advisory firm Cameron Hanover in Connecticut.
The steep losses for equities, seen as a proxy for future oil demand, dulled any benefits from President Barack Obama’s job plan unveiled late Thursday.
Obama asked Congress to approve a $440 billion program to create jobs and boost the U.S. economy, using a combination of tax cuts and government spending. Investors had expected a plan of around $300 billion.
“It does not very much look like it’s going to succeed as much as (Obama) hoped,” with Republican support difficult to achieve, Beutel said.
Meanwhile, finance ministers and central bankers of the seven top industrialized nations have gathered in the French port city of Marseilles, and investors hope they will bring forward measures to jump-start the global economy.
The dollar index DXY +1.19% , which measures the U.S. unit against a basket of six major rivals, rose to record levels as the euro tanked. The index most recently gained to 77.152, up from 76.284 late Thursday in North American trading.
A stronger dollar is a negative for oil and other commodities as it makes them more expensive for holders of other currencies.
Meanwhile, Tropical Storm Nate drifted northward in the Gulf of Mexico, and it is expected to become the third hurricane of the Atlantic season later Friday.
Its impact was dulled by the equities and dollar markets, Beutel said. “Today, people are thinking more about demand than supply,” he said.
Some oil companies such as BP PLC BP -2.40% and Apache Corp. APA -2.79% said they are beginning evacuations of non-essential workers from offshore platforms, according to media and analyst reports.
“Although at this point Nate does not appear to threaten major oil-producing areas, it comes just as producers are recovering from [Tropical Storm Lee] last week and is a useful reminder that we not even halfway through the hurricane season yet,” analysts at J. P. Morgan said in a note to clients Friday.
Gasoline for October delivery RB1V -3.94% was off 4 cents, or 1.4%, to $2.85 a gallon.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
