Forexpros – bsp;Forexpros – Crude oil futures hit a one week low on Thursday in response to a soaring U.S. dollar and ECB President’s Mario Draghi’s hesitation to increase bond purchases.
On the New York Mercantile Exchange, light, sweet crude futures for January delivery traded at USD98.34 a barrel during late session U.S. trade plunging 2.15%.
It fell from a session high of USD100.56 a barrel. Strength in the U.S. dollar worked to depress crude prices.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was higher by 0.52% to trade at 78.90.
Dollar strength usually hurts commodities, as it lessens their appeal as an alternative asset class and makes dollar-priced commodities more expensive for holders of other currencies.
Meanwhile, David Greely, head of energy research at Goldman Sachs stated at the Inside Commodities conference today in New York City, “The physical markets are telegraphing severe tightness. Oil may raise if Europe resolves its financial woes and demand returns.”
Crude oil reacted bullishly to the ECB rate cuts, but Draghi’s comments quickly quashed the buying.
The tumbling of demand has overshadowed Iranian supply disruption fears adding to the bearish sentiment.
Elsewhere on the ICE Futures Exchange, Brent oil futures for January settlement gave back 1.1% to trade at USD108.31 a barrel.
This nearly $10.00 spread remains outside of historical norms. The two contracts have traditionally traded within USD1.00 of each other.
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