MW: Oil fails to hold $100 as dollar gains post-Fed
By William L. Watts, MarketWatch
NEW YORK (MarketWatch) — Oil futures edged lower Thursday, with the U.S. benchmark slipping back below $100 a barrel after a smaller-than-expected decline in first-time claims for unemployment benefits and as the dollar continued to strengthen a day after Federal Reserve Chairwoman Janet Yellen hinted rates might rise sooner than had been expected.
Nymex WTI crude oil futures for April delivery CLJ4 -0.38% fell 35 cents, or 0.3%, to $100.02 a barrel. Europe’s benchmark, ICE April Brent futures UK:LCOK4 -0.07% lost 18 cents, or 0.2%, to $106.67 a barrel.
“Fundamentally, the refinery turnaround season on both sides of the Atlantic, improving spring weather and plentiful supplies are still set to limit the upside in both benchmarks,” said Andrey Kryuchenkov, strategist at VTB Capital in London.
Oil futures extended losses after data showed the initial weekly jobless claims rose by 5,000, to 320,000 in the week ended March 15. Economists surveyed by MarketWatch had expected claims to climb to 325,000 from an unrevised 315,000 a week earlier. Stronger labor data reinforces expectations the Fed will continue withdrawing its monetary stimulus to the economy.
Oil rallied Wednesday, with WTI crude settling back above $100 a barrel, closing shortly after the Federal Reserve’s rate announcement. In her news conference, Yellen indicated interest rates could begin to rise in mid-2015. The comments sent stocks reeling and lifted U.S. Treasury yields and the dollar.
The U.S. unit DXY +0.33% continued to gain some ground Thursday. A stronger dollar can be negative for commodities priced in the currency, making them more expensive to nondollar users. Meanwhile, waning fears over the Crimea crisis have robbed oil, particularly Brent, of the geopolitical risk premium that had built up in recent weeks, analysts said.
“The waning concerns about the Crimean crisis, the economic weakness in the emerging economies, the stronger U.S. dollar and the previous excessive speculation are all taking their toll,” wrote Carsten Fritsch, analyst at Commerzbank in Frankfurt.
Still, Fritsch said that despite a robust supply situation, “we believe there are still risks to supply which should shore up the price at $105 per barrel.”
He also noted data that showed refineries in China processed more crude than ever before in February. “This is due in part to seasonal effects and in part to new refineries that have now gone into operation,” Fritsch wrote.
April natural gas futures NGJ14 -1.03% dropped nearly 10 cents, or 2.2%, to $4.39 per million British thermal units.
