Stronger Dollar, Supply Data Hurt Oil

By Anonymous

Oil prices fell for a third straight session on Friday, hurt by a stronger dollar as traders looked ahead to future supply signals.

Light, sweet crude for October delivery fell 0.9% to $67.16 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, was down 0.6% at $76.03 a barrel. Prices have stabilized below multiyear highs hit earlier this year as the supply disruptions that buoyed oil have eased and worries about trade tensions lowering demand have intensified.

Trade threats and weakness in emerging markets have also boosted the dollar, making oil and other dollar-denominated commodities more expensive for overseas buyers. On Friday, the WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, rose 0.2%, also getting a boost from the latest jobs report.

A Thursday government report showing a combined 5 million-barrel increase in gasoline and distillate stockpiles and 3,6 million-barrel rise in processed petroleum products last week also hurt energy prices, with some analysts interpreting the figures as a sign that the lower-demand fall season is near.

Prices have fallen lately even though the Energy Information Administration’s report showed a larger-than-expected decline in crude-oil stockpiles.

“The stock build in refined products appears to have been a bigger driver in price” than the crude-inventory decline, according to Warren Patterson, commodities strategist at ING Bank. “In fact, U.S. gasoline inventories stand at least at a five-year high,” Mr. Patterson added.

Oil-market observers are looking ahead to weekly data later Friday from Baker Hughes on the number of rigs drilling for oil in the U.S. and future inventory reports for the latest figures on domestic supply and demand.

Some investors still think uncertainty surrounding U.S. sanctions against Iran could lift oil heading into the latter part of the year, as supply disruptions and steady demand despite trade threats have kept prices up more than 13% this year.

Analysts are still debating whether higher production from Saudi Arabia and other large producers could fill a possible supply gap and awaiting monthly market reports from the Organization of the Petroleum Exporting Countries and the International Energy Agency due out next week.

Among refined products Friday, gasoline futures fell 0.7% to $1.9378 a gallon. Diesel futures dropped 0.6% to $2.1962 a gallon.

Write to Christopher Alessi at [email protected] and Amrith Ramkumar at [email protected]