Oil Prices Hesitate on Stronger Dollar, Economy
Source: The Washington Post (10/26/10)
"Prices moved between small losses and small gains."
Gas pump prices drifted lower, with the national average for a gallon of regular at $2.81, according to AAA, Wright Express and Oil Price Information Service. That's almost two cents lower than a week ago and 14 cents higher than a year ago.
Slight gains by the dollar against the euro made crude priced in dollars more expensive for investors holding other currencies.
"It seems that the U.S. dollar continues to be strongly correlated with the oil market, as the recent U.S. dollar weakness has helped oil prices to remain fairly strong above $80 per barrel area, amid these fragile economic conditions," said analysts at Sucden Financial in London.
The Energy Department releases its weekly reading on petroleum inventories on Wednesday. In a note to investors, energy consultants MF Global said an expected rise in stockpile levels is putting downward pressure on prices.
Analysts think crude inventories grew by 1.5 million barrels last week, according to a survey by Platts. Gasoline and distillate stocks are also expected to rise.
"While the numbers could bring some surprises this week, one week's report will not change a continued bearish supply-usage situation as large supply surpluses will remain intact," energy consultants Ritterbusch and Associates said in a report.
"Energy futures could continue to chop sideways through the rest of this week as both the bulls and the bears are apt to exercise caution ahead of next week's Fed meeting," Ritterbusch said.