- The Washington Times - Friday, May 2, 2008

NEW YORK (AP) — Another jump in the dollar and the end of an oil workers’ strike in Nigeria sent crude prices down yesterday as speculators who drove crude futures to nearly $120 pulled out of the market. Retail gas prices, meanwhile, rose to a new high of at least $3.62 a gallon.

The dollar’s rise against the euro and other currencies stripped away some of oil’s appeal to investors who have been betting for months that the greenback would continue to falter. When the greenback gains ground, commodities such as oil lose their value as a hedge against inflation, prompting selling. Also, a stronger dollar makes oil more expensive to investors overseas.

As the dollar has strengthened this week, oil futures have dropped more than $7 from their highs to their lowest levels since April 14. Yesterday, light, sweet crude for June delivery fell 94 cents to settle at $112.52 a barrel on the New York Mercantile Exchange, after trading as low as $110.30. Meanwhile, the euro bought $1.5457, down from $1.5642 late Wednesday.

Meanwhile, a strike that cut production at an Exxon Mobil Corp. facility in Nigeria ended yesterday, giving investors another reason to sell. Oil prices jumped last week on word of the strike and a separate labor action in Scotland, which ended Tuesday. Nigeria is a major U.S. oil supplier.

Analysts caution that oil’s swoon could be temporary. The dollar’s protracted decline has been a major factor behind oil’s rise from about $64 a year ago, and future dollar weakness could easily push crude futures above $120.

“It’s all about the dollar,” said James Cordier, president of Tampa, Fla., trading firms Liberty Trading Group and OptionSellers.com. “I don’t think the dollar is going to stay strong.”

Indeed, oil prices rebounded more than $2 from their lows late in yesterday’s trading session after the dollar stopped gaining ground against the euro.

The dollar’s recent gains have come on a view that the Federal Reserve’s interest rate cutting campaign is nearing its end; lower interest rates tend to weaken the dollar.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide