MW: Oil futures slip as dollar gains on taper talk
By Sara Sjolin and Michael Kitchen, MarketWatch
LONDON (MarketWatch) — Oil futures erased earlier gains and headed lower on Friday, as a stronger greenback pressured dollar-denominated commodities on the back continued tapering talks.
Benchmark U.S. crude oil for October delivery CLV3 -0.61% fell 32 cents, or 0.3%, to $104.70 a barrel, partly erasing a 1.1% rally back above the $105 level in Thursday’s trade on the New York Mercantile Exchange.
The losses for the contract came as the dollar moved higher with the Federal Reserve’s annual gathering in Jackson Hole, Wyo., in focus. Atlanta Fed Bank President Dennis Lockhart said he would back a September tapering of the central bank’s $85-billion-a-month asset purchases if data between now and the meeting show the economy on a steady growth path.
A reduction in asset purchases is expected to support the dollar, which in turn would weigh on commodities traded in the U.S currency. If the dollar rises, commodities such as oil would get more expensive for holders of other currencies. The ICE dollar index DXY +0.00% traded at 81.603, up from 81.480 late in North America Thursday.
Friday’s decline in oil prices also added to losses seen earlier in the week, sending the front-runner contract on track for a 2.5% weekly drop. On Thursday, however, prices trimmed the weekly drop following encouraging manufacturing data from China, along with a 26-month-high for a key gauge of euro-zone business activity.
In further positive news for crude, the American Petroleum Institute reported Thursday that U.S. oil demand increased by 1.7% in July from a year earlier, marking the highest July total since 2010.
The negative trading sentiment in the oil market on Friday differed from the mood in the global equity markets, where most Asian stocks closed higher, European stock traded in positive territory and U.S. stocks opened with solid gains.
Elsewhere in the energy complex, October Brent crude UK:LCOV3 +0.01% improved by 45 cents, or 0.4%, to $110.35 a barrel.
September natural gas NGU13 -1.10% gave back 3 cents, or 0.9%, to trade at $3.51 per million British thermal units after shooting 2.5% higher Thursday, thanks to data showing a smaller increase in weekly supplies than analysts had expected.
September gasoline RBU3 +0.53% tacked on 3 cents, or 1.2%, to $3 a gallon.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles. You can follow him on Twitter at @KitchenNews.
