Oil slipped below $118 a barrel on Thursday, as a stronger dollar triggered selling and traders focused on a build in US crude stockpiles.US light crude for June delivery fell 40 cents a barrel to $117.90 a barrel, after gaining 23 cents in New York on Wednesday.
The May contract shot to a record high of $119.90 before it expired on Tuesday due to supply concerns.But prices eased as crude oil stocks surged by 2.4 million barrels, double the forecast level, mainly from gains on the West Coast. "The heavier crude stocks are the main driver for profit taking," said Tetsu Emori, fund manager at Astmax Co Ltd in Tokyo.The dollar's recovery against the euro and falls in other commodities such as gold also undermined prices.
Cash gold extended losses in trade after losing more than 2 percent the previous day. It fell to $903.30/904.30 an ounce from $905.50/906.70 an ounce late in New York on Wednesday.
The euro was steady at $1.5880, near on Wednesday's low of $1.5860 hit on electronic trading platform EBS. The dollar was barely changed at 103.40 yen, below a two-month high of 104.66 hit last week. But oil's losses were limited in light of a bigger-than-expected draw in gasoline stocks in the United States, just weeks ahead of the peak summer driving season.
"I won't be surprised that US gasoline demand will be strong this year as many will travel across the vast land domestically given the value of the dollar," said Peter McGuire, managing director of Commodity Warrants Australia. US gasoline inventories fell for the sixth straight week, by 3.2 million barrels against the forecast for a 2.3 million decline.
Lingering geopolitical worries also supported prices. New attacks on Nigeria oil export facilities are likely to partly offset this week's start-up of Saudi Arabia's 500,000 barrel-per-day Khursaniyah field, said Antoine Halff, deputy head of research from Newedge USA, in a report. Refinery workers at Britain's Grangemouth refinery are due to begin a two-day strike on Sunday that will shut the plant and squeeze fuel supplies in Scotland and northern England.
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