MW:Oil prices head lower as U.S. dollar gains ground
By Carla Mozee, MarketWatch
LOS ANGELES (MarketWatch) — Crude-oil prices fell in electronic trade Monday, feeling the weight of strength from a rising dollar ahead of the release of monthly U.S. retail-sales data.
Crude oil for June delivery CLM3 -0.85% declined 84 cents, or 0.9%, to $95.20 a barrel during Asian hours. It was little changed after Chinese economic data for April showed some improvement from March’s results, though industrial production and fixed-asset investment results missed expectations.
Rival London-traded benchmark June Brent crude UK:LCOM3 -0.76% on Monday was down 71 cents, or 0.7%, at $103.20 a barrel.
Oil prices may react later Monday to the U.S. Commerce Department’s report on retail sales for April, as the report could give signs about the outlook for oil demand. Economists polled by MarketWatch expect retail sales to drop 0.6%, led by lower gasoline and motor-vehicle sales, compared with a 0.4% decline in March.
Benchmark U.S. crude prices on Friday fell 35 cents, or 0.4%, on the New York Mercantile Exchange as the U.S. dollar rose, though oil recovered from session lows.
The dollar was extending gains against major rivals Monday, with Japan’s currency USDJPY -0.23% falling below the 102-yen level and the Australian dollar AUDUSD -0.09% trading below parity. The ICE dollar index DXY +0.03% , which measures the U.S. dollar’s moves against six other major currencies, rose to 83.155, up from 83.132 late Friday in North America.
The moves came as the U.S. Federal Reserve had reportedly sketched out a plan for winding down its stimulus program of buying $85 billion in bonds each month. Officials were trying to clarify the strategy so markets don’t overreact about their next moves, according to The Wall Street Journal’s report.
The end of the Fed’s bond-buying program would make the U.S. dollar more attractive in terms of yield, analysts have said. But a stronger greenback tends to push down prices of dollar-denominated commodities such as oil, as it makes them more expensive to holders of other currencies.
On Friday, the Organization of the Petroleum Exporting Countries said demand grew less than expected in the first quarter of 2013, but it left its overall forecast unchanged at a rise of 800,000 barrels a day. OPEC, in a monthly report ahead of its May 31 summit, still expects consumption will increase in the second half of this year.
Elsewhere in the energy complex Monday, natural gas for June delivery NGM13 -0.46% shed 2 cents, or 0.5%, to $3.89 per million British thermal units, and June heating oil HOM3 -0.64% slipped 2 cents, or 0.6%, to $2.89 a gallon.
June gasoline RBM3 -0.77% lost 2 cents, or 0.6%, to trade at $2.84 a gallon.
