Crude Turns Lower On Broadly Stronger US Dollar
ICM Brokers | May 12, 2014 03:40AM ET
Crude Oil
New York-traded crude oil futures briefly rose to a two-week high on Friday before turning lower as a broadly stronger U.S. dollar prompted investors to lock in recent gains. The U.S. dollar rallied to a one-month peak against the euro on Friday, extending steep gains from the previous session after the European Central Bank indicated that it could ease monetary policy as soon as next month. The U.S. Dollar Index, which tracks the performance of the greenback against a basket of six other major currencies, advanced 0.57% on Friday to end the week at 79.92, the most since April 30. Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies. Futures were higher earlier in the day amid easing concerns over a slowdown in demand from China. Data released Friday showed that consumer price inflation in China rose 1.8% in April from a year earlier, less than market expectations for a 2.0% gain. Meanwhile, market players continued to weigh uncertainty surrounding developments in Ukraine. Russian President Vladimir Putin called on pro-Russia separatists in the eastern reaches of the country to postpone their referendum on independence. However, the separatists said they plan to go ahead on Sunday with a vote that some fear could lead to a civil war. Russia produced 10.4 million barrels of oil per day in 2012 and exported 7.4 million, making it the world’s second largest oil exporter after Saudi Arabia.
Gold
Gold futures ended Friday’s session modestly lower, as a broadly stronger U.S. dollar dampened the appeal of the precious metal, while traders continued to monitor developments in Ukraine. The U.S. dollar rallied to a one-month peak against the euro on Friday, extending steep gains from the previous session after the European Central Bank indicated that it could ease monetary policy as soon as next month. The U.S. Dollar Index, which tracks the performance of the greenback against a basket of six other major currencies, advanced 0.57% on Friday to end the week at 79.92, the most since April 30. A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. Meanwhile, market players weighed uncertainty surrounding developments in Ukraine. Russian President Vladimir Putin called on pro-Russia separatists in the eastern reaches of the country to postpone their referendum on independence earlier in the week. However, the separatists said they plan to go ahead on Sunday with a vote that some fear could lead to a civil war. The West is accusing Russia of leading a separatist revolt in eastern Ukraine after it annexed Crimea last month.
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