Oil prices fell below $145 a barrel as the US dollar strengthened slightly against the Euro and the Japanese yen.
Oil drops below US$145 a barrel
Oil prices fell below US$145 (Dh532) a barrel today as the US dollar strengthened slightly against the Euro and the Japanese yen. Suggestions by Saudi Arabia's oil minister that his country doesn't plan to boost production helped bolster prices earlier in the session. Trading volumes were lower than usual as markets were closed in the US for the July 4 holiday. By midday in Europe, light, sweet crude for August delivery was down 85 cents to $144.44 a barrel in electronic trading on the New York Mercantile Exchange.
Crude futures rose to $145.85, a record high, in New York yesterday before settling at a record finish of $145.29 a barrel. In London, Brent crude futures fell 89 cents to $145.19 a barrel on the ICE Futures exchange. Oil prices have risen more than 50 per cent so far this year. Speaking in Madrid yesterday, the Saudi Arabian Oil Minister, Ali Naimi, said that the world's biggest oil exporter had no immediate plans to boost crude output because there was no need to do so. Mr Naimi said Saudi Arabia is ready to raise production if the kingdom determines supply-and-demand fundamentals have changed. But for now, "all our buyers are satisfied and happy," he said.
Gains by the dollar against the Euro yesterday helped keep oil prices from rising further. The greenback strengthened after the European Central Bank raised its benchmark interest rate an expected quarter point but signalled it didn't expect additional rate hikes that might further boost the Euro. Today, the dollar was stronger against the Euro at $1.5694 compared to $1.5699 a day earlier and it also gained to 106.81 Japanese yen from 106.77 yen late yesterday.
A falling dollar has helped boost oil prices this year as investors often buy commodities such as oil as a hedge against inflation when the greenback weakens. Also, a struggling dollar makes oil less expensive to investors overseas. Oil prices are rising amid a drop in stock prices worldwide, with the major stock market indices all down by double digits since the start of the year.