Crude Drops as Dollar Strengthens After Jobless Claims
West Texas Intermediate crude fell as the dollar strengthened against the euro after the number of Americans filing jobless claims decreased to the lowest level in more than five years.
Prices dropped as much as 1 percent as the dollar extended gains on Labor Department data that applications for unemployment benefits unexpectedly slid. Crude stockpiles were the most since 1931 last week, the Energy Information Administration said yesterday. The spread between WTI and Brent oil in London was below $8 a barrel for a second day.
“The dollar, more than anything, being stronger right now, seems to be the main reason pushing down oil prices,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “It’s getting stronger after the very good weekly jobless claims number. The market is re-examining the fact that we have plenty of supplies in this country.”
WTI for June delivery slipped 64 cents, or 0.7 percent, to $95.98 a barrel at 9:29 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 10 percent above the 100-day average for the time of day. Futures climbed to $96.62 yesterday, the highest settlement since April 2.
Brent for June settlement decreased 64 cents, or 0.6 percent, to $103.70 a barrel on the London-based ICE Futures Europe exchange. Volume was 11 percent below the 100-day average.
The European benchmark grade traded at a $7.72 premium to WTI, unchanged from yesterday’s settlement, which was the narrowest level based on closing prices since Jan. 20, 2011.
The dollar rose as much as 0.4 percent to $1.3106 per euro. A stronger dollar and weaker euro reduce dollar-denominated oil’s appeal as an investment alternative.
Applications for unemployment insurance payments decreased by 4,000 to 323,000 in the week ended May 4, the least since January 2008, the Labor Department said. Economists forecast 335,000 claims, according to the median estimate in a Bloomberg survey.
“The jobless claims number is overshadowed by the movement in the dollar,” Flynn said.
Crude inventories increased 230,000 barrels to 395.5 million barrels in the seven days ended May 3, rising for a third week, the EIA, the Energy Department’s statistical arm, reported. Stocks of distillate fuels, including heating oil and diesel, jumped 1.6 percent to 117.6 million.
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