Oil Falls on Stronger USD
Source: Associated Press (1/6/11)
"Labor Department report showing moderate job growth pushed the USD higher."
The dollar rose as a Labor Department report on jobless claims pointed to moderate job growth, and retailers reported the strongest increase in holiday sales since 2006. PFGBest Analyst Phil Flynn said that oil prices have been propped up in recent months by federal stimulus programs, but "if we continue to get data like this, we're not going to need any more" stimulus plans.
Benchmark crude for February delivery fell $1.92, or 2%, to $88.38 a barrel in midday trading on the NYMEX.
Meanwhile, natural gas prices jumped about 2% Thursday after the government reported a bigger-than-expected drop in supplies, and forecasters said January could be the coldest month since 1985.
Natural gas, which is used to heat homes and generate electricity, is still at higher levels in the U.S. than the five-year average. But the EIA said that supplies are falling as homeowners and businesses crank up the heat. This month promises to keep thermostats up in much of the U.S.
Forecasters with Accuweather said a blast of Arctic air will sweep across the country starting at the end of this week. From Jan. 10 to 20, Chicago and Denver could see temperatures below zero. New York may only see highs in the teens, and southern cities could stay below freezing.
The EIA said natural gas supplies fell by 135 bcf last week, putting the storage level 1.5% below last year's level and 6.5% above the five-year average. The decline was more than analysts expected, according to Platts.
Prices shot up immediately following the government report. Natural gas for February delivery rose $o.10, or over 2%, to $4.54 per 1,000 cubic feet by midday on the NYMEX.