MW: Oil rebounds from recent losses as dollar stumbles
By Virginia Harrison and Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Oil futures rebounded in electronic trading Friday, an upbeat session for the broader commodities complex as the U.S. dollar declined.
Crude for November delivery CLX2 +0.97% added 76 cents, or 0.7%, to $93.05 a barrel on the New York Mercantile Exchange in afternoon European trading hours.
The modest gains pared oil’s weekly loss to just over 6%. What’s behind the sharp retreat in recent days has left some traders scratching their heads, though rumors of a strategic supply release as well as comments from Saudi Arabian oil officials and rising inventories are among the factors cited. Read analysis on what's behind oil's recent drop.
Crude futures had been rallying since early August, in part due to anticipation that a slowing global economy would prompt central banks to pump more money into the financial system. The Federal Reserve announced its third round of quantitative easing, or QE3, earlier this month to help underpin the U.S. economic recovery.
Capital Economics strategist Julian Jessop said while past rounds of QE have boosted commodity prices, any lift from QE3 will likely be “relatively small and short-lived.”
A weaker dollar lent support in Asian trading, with the ICE dollar index DXY -0.34% falling to 79.350, off from 79.428 in late North American trading Thursday. A softer greenback tends to boost dollar-denominated commodities such as crude, as it makes them cheaper to holders of other currencies.
In other energy trading Friday, gasoline for October delivery RBV2 +1.28% rose 3 cents, or 1%, to $2.94 a gallon, while October heating oil HOV2 +0.70% added 2 cents, or 0.5%, to $3.11 a gallon. The contracts expire next week.
Natural gas for October delivery NGV12 +0.11% also gained, up 2 cents, or 0.8%, to $2.82 per million British thermal units.
Virginia Harrison is a MarketWatch reporter based in Sydney.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
