NASDAQ: Oil Prices Get Small Boost From Dollar's Slip
Oil prices were up modestly on Thursday, reacting again to a falling dollar after a data release showed slightly fewer U.S. job gains than expected.
Oil has been heavily influenced by the dollar for months, repeatedly moving in the opposite direction. The WSJ Dollar Index fell from gains and dipped into losses Thursday after initial jobless claims, a proxy for layoffs, increased by 10,000 to a seasonally adjusted 281,000 in the week ended June 27, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal had expected 270,000 new claims last week.
Oil is priced in dollars and it becomes more expensive for holders of other currencies as the greenback appreciates.
Light, sweet crude for delivery in August gained 47 cents, or 0.8%, to $57.43 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, recently traded up 80 cents, or 1.3%, to $62.81 a barrel on ICE Futures Europe.
Analysts said traders were also probably still responding to Wednesday's steep fall. WTI fell by more than 4% and Brent dropped by 2.5% after the U.S. Energy Information Administration reported domestic oil stockpiles unexpectedly rose by 2.4 million barrels last week, the first increase since April.
Crude stocks remain near levels not seen for this time of year in at least the last 80 years, the EIA said.
"We've had a kind of an onslaught of negative news…and now it's a stepping off point," said Gene McGillian, an analyst at Tradition Energy.
But Mr. McGillian said traders are likely to hesitate. Crude has been trapped within about a $6 trading range since late April, and many people are likely to buy back into the contract -- some to place bullish bets and some to close out bearish bets -- on the expectation that oil prices aren't yet ready to break out of that range, Mr. McGillian and others said.
Meanwhile, negotiations over the Iranian nuclear deal continue to drag on after the West and Tehran extended their self-imposed deadline earlier this week.
The chief of the United Nations' nuclear watchdog, the International Atomic Energy Agency, is heading to Tehran for meetings with President Hasan Rouhani and other senior officials. The Vienna-based IAEA will be tasked with policing Iran's nuclear program.
A final agreement to curb Iran's nuclear program is expected to pave the way for the lifting of Western sanctions and release more Iranian crude on the global market.
"We are going into the second half of this year with a heavily oversupplied fundamental picture, which makes any bullish price forecast hard to accept," David Hufton of PVM brokerage said.
Gasoline futures recently traded up 1.7% to $2.0412 a gallon. Diesel futures traded up 1.4% to $1.8650 a gallon.
