Crude oil extends losses as dollar gains on talk of end to stimulus
Published Jun 21, 2013 01:38PM ET
Stimulus measures such as the Fed's USD85 billion monthly bond-buying program weaken the dollar, though talk of their dismantling can strengthen the greenback.
A stronger greenback tends to make oil a less attractively priced asset in dollar-denominated exchanges, especially in the eyes of investors holding other currencies.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded down 2.03% at USD93.21 a barrel on Friday, off from a session high of USD95.80 and up from an earlier session low of USD93.13.
On Thursday, surging regional factory data in the U.S. stoked sentiments that the Federal Reserve will soon begin to dismantle monetary stimulus programs, one day after Fed Chairman Ben Bernanke said such programs may taper this year and possibly end next year if the economy improves.
The Federal Reserve Bank of Philadelphia said Thursday that its manufacturing index rose to 12.5 in June from -5.2 in May, well above expectations for a -2.0 reading.
A separate report showed that U.S. existing home sales climbed 4.2% to 5.18 million units in May from April’s total of 4.97 million, far surpassing market calls for a 0.6% increase.
The data sent the dollar gaining and oil falling, though the commodity did inch upwards briefly on concerns Syria's internal conflict may involve other nations across the oil-rich Middle East and disrupt supply.
Oil also continued to suffer after China’s HSBC preliminary manufacturing purchasing managers’ index fell to a nine-month low to 48.3 in June from 49.2 in May, indicating that the slowdown in manufacturing there may be worsening.
Analysts were expecting the number to improve to 49.4, and the disappointment fueled concerns that demand in the world's second-largest consumer of crude may be slipping in a global economy that is awash in crude.
On the ICE Futures Exchange, Brent oil futures for August delivery were down 1.42% at USD100.70 a barrel, up USD7.49 from its U.S. counterpart.
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Written By: Investing.com
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