By Michael Kitchen, MarketWatch
MADRID (MarketWatch) — Benchmark U.S. crude-oil futures fell on Thursday, in European trading hours, tracking a general decline across commodities and gains for the dollar in the wake of Federal Reserve action a day earlier.
Extending losses seen in Asia, oil for January delivery CLF3 -0.73% fell 52 cents, or 0.6%, to $86.25 a barrel.
The drop followed January crude’s 1.1% advance on the New York Mercantile Exchange Wednesday, when the contract touched a high of $87.68.
The gains Wednesday came amid a trio of bullish influences: The Federal Reserve unveiled its latest bond-buying program as well as surprising markets by setting thresholds for unemployment and inflation that must be in place before the central bank will raise rates. Read: Fed sets jobless, inflation targets; to buy bonds
Also for oil, the Organization of the Petroleum Exporting Countries on Wednesday held its production quota steady, and the International Energy Agency slightly raised its forecast for oil demand for 2013. Read: Oil ends higher, near $87 a barrel.
Soozhana Choi, head of commodities research at Deutsche Bank, cited the Fed action and the IEA forecast as particularly helpful for crude prices.
“This [Federal Reserve move] is seen as positive for equities, negative for the U.S. dollar and consequently constructive for commodities. Upward revisions to global oil demand by the International Energy Agency were also seen as supportive for oil,” Choi said.
But while Wednesday’s weaker dollar helped oil prices, the greenback rebounded Thursday, as the ICE dollar index DXY +0.15% jumped to 79.942, up from 79.858 late in North America the previous day.
And gold prices plummeted as investors took in Federal Reserve moves, on the view future stimulus moves may be limited. An easy monetary policy traditionally tends to be supportive for prices by investors who see diminishing value in currencies. Read: Gold prices skid on profit-taking after Fed
Analysts at Citi Futures said current prices for benchmark U.S. crude were roughly where they should be for now.
“We continue to recommend standing aside from trading [benchmark Nymex] crude oil, which we see as more fairly valued relative to its direct fundamentals,” they said.
Elsewhere in the energy complex, natural gas for January delivery NGF13 +0.09% eased 0.1% — a loss of less than a penny — to remain at $3.38 per million British thermal units
January gasoline RBF3 -0.51% also slipped less than a cent to $2.65 a gallon, while January heating HOF3 +0.05% was little changed at $2.97 per gallon.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
