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Oil prices slide on dollar rise, profit taking |
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Updated at:
0800
PST, Tuesday, June 16, 2009 |
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NEW YORK: Oil prices tumbled Monday amid a strengthening US dollar and profit taking after strong gains chalked up recently but analysts do not see a let-up in the recent rally.
New York's main futures contract, light sweet crude for delivery in July, shed 1.42 dollars from Friday's close to end at 70.62 dollars a barrel. It fell below the 70-dollar level in early trading.
London's Brent North Sea crude for July shed 1.48 dollars to 69.44 dollars.
John Kilduff of MF Global attributed the falling oil prices to the dollar, which gained strength Monday, and profit taking from recent eight-month-high prices.
"It might be seen as getting a little bit ahead of itself and there's some profit taking," he said. "Some take excuses as well from the equity market that's also under pressure."
Kilduff said he did not expect the recent oil price surge arising from hopes of a global economic recovery to end.
"We've seen this a number of times in the recent weeks, so it's hard to declare the rally's over just on this one day move down: the dollar will reweaken and it looks like there's a consensus building that crude oil inventories will draw down," he added.
A weaker dollar makes crude cheaper for buyers holding stronger currencies and that in turn tends to stimulate demand and push the market higher.
The greenback particularly rose against the euro Monday following a spike in eurozone job losses and fresh concerns the credit crunch could stifle tentative signs of recovery there.
"Oil is the weak star due to dollar strength," Phil Flynn of Alaron Trading said.
Oil jumped above 73 dollars last week, hitting 73.23 dollars in New York on Thursday -- the highest level since October -- amid hopes of a global economic recovery.
Last week, oil also found support after the International Energy Agency raised projections for world oil demand by 120,000 barrels a day to 83.3 million in 2009, up from its 83.18 million forecast in May.
Sliding crude oil inventories in the United States, which is the world's biggest energy consuming nation, added to the momentum. |
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ISSN 1563-9479 
