Oil prices slip as dollar finds footing
NEW YORK (AFP) — World oil prices slipped Thursday as the dollar found new strength against amid market expectations that the US Federal Reserve has paused its aggressive interest rate-cutting campaign.
New York's main oil futures contract, light sweet crude for June delivery, dropped 94 cents to close at 112.52 dollars per barrel. New York crude had struck a record high 119.93 dollars on Monday.
In London, Brent North Sea crude for June delivery fell 86 cents to settle at 110.50 dollars. The contract had hit an all-time peak of 117.56 last Friday.
Trading volume was light as most Asian and European markets were closed for a public holiday.
The US currency fell to a record low of 1.6019 to the euro on April 22 but has since recovered, changing hands at around 1.55 dollars in European trade on Thursday.
A stronger US unit makes dollar-priced crude more expensive for foreign buyers and tends to dampen demand.
Wachovia Securities analyst Eric Wittenauer said that the US Federal Reserve's statement on Wednesday, which accompanied its widely expected quarter-point interest rate cut, seemed to signal a pause in rate cutting. The Fed has slashed 3.25 percent off its federal funds rate since September.
With that market signal, "the dollar is continuing to show signs of improving," he said.
And since there is a strong negative correlation between dollar-denominated commodities and the greenback, he said, "stabilization and improvement in the dollar should pressure the commodity complex going forward."
After striking record highs on Monday, oil prices began sliding Tuesday as a 48-hour strike at the Grangemouth refinery in Scotland ended. The stoppage had closed a pipeline which supplies 40 percent of Britain's oil and gas.
Prices fell sharply Wednesday in response to a bigger-than-expected rise in crude oil reserves in the United States, the world's biggest energy consumer.
The US government reported that US crude inventories rose 3.8 million barrels in the week ending April 25, far stronger than market expectations of a gain of 1.5 million barrels.
Supply concerns lifted somewhat Thursday after workers at ExxonMobil's Nigerian subsidiary ended an eight-day strike.
"We have agreed to go back to work and we signed an agreement this afternoon. I can assure you that the production will resume immediately," said Olusola George Olumoroti, head of the Petroleum and Natural Gas Senior Staff Association of Nigeria union.
The strike and attacks on pipelines belonging to other companies in the southern Delta region badly hit production in Africa's biggest oil producer and helped push world crude prices towards 120 dollars earlier this week.
