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Sep 10, 2010
OIL FUTURES: Crude Drops On India Rate Hike, Stronger DollarMar 19, 2010
By Brian Baskin
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Crude futures dropped Friday as investors exited riskier markets on an interest-rate increase in India and concerns about the European Union's handling of Greece's debt.
Light, sweet crude for April delivery settled $1.52, or 1.9%, lower at $80.68 a barrel on the New York Mercantile Exchange. The April contract expires Monday, and the bulk of trading took place in May futures, which settled $1.57, or 1.9%, lower at $80.97 a barrel. Brent crude on the ICE futures exchange was recently down $1.64, or 2%, at $79.84 a barrel.
Oil briefly fell below $80 a barrel after India's central bank decided to raise its key lending and borrowing rates in an effort to reduce inflation. However, a side effect of the move could be slower growth in a rapidly expanding market for oil and other commodities. Many investors also feared that central banks in other emerging economies, including China, could follow India's lead.
Oil prices were also due for a fall after earlier in the week coming close to the 2010 intraday high of $83.95 a barrel, set on Jan. 11. Futures have approached that price numerous times since then, only to fall back on concerns about the slow pace of the economic recovery, and high global oil inventories.
However, oil prices held at $80 a barrel, which has this month become a firm low end of an increasingly narrow trading range.
"Once again ... oil reached the top end of its range, and once again failed to break out," said Matt Zeman, president of trading at LaSalle Futures Group in Chicago. "I'm still not convinced, given the amount of supply in the marketplace, that the market has the gusto to break out of its range."
Crude futures were also pressured lower by a stronger dollar, part of a general move out of riskier assets on renewed uncertainty over how Greece would handle its debts.
Members of the European Union appeared not to have reached an agreement on how to provide aid to Greece, which is struggling with massive deficits. The dollar strengthened early in the day, recently holding at $1.3537 to the euro, from $1.3627. A stronger dollar raises the cost of buying oil for holders of other currencies.
"On Tuesday, everybody thought the Greece crisis was solved," and oil prices shot up, said Phil Flynn, an analyst with PFGBest in Chicago. "That was Tuesday. Now people are saying, wait a second, this crisis is far from over."
Front-month April reformulated gasoline blendstock, or RBOB, settled 4.53 cents, or 2%, lower at $2.2556 a gallon. April heating oil settled 4.24 cents, or 2%, lower at $2.0767 a gallon.
More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:
Nymex Light Crude Oil Close
Nymex Harbor RBOB Gasoline Close
Nymex Heating Oil Close
ICE Brent Crude Oil Close
ICE Gas Oil Close
-By Brian Baskin, Dow Jones Newswires; 212-416-2453; brian.baskin@dowjones.com [back] |
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