Commodity Corner: Oil Rallies As Dollar Slides

Commodity Corner: Oil Rallies As Dollar Slides

Thursday, April 21, 2011
Rigzone Staff
by Matthew Veazey

The U.S. Dollar continued to lose ground against other currencies and oil continued to rally Thursday.

Crude oil for June delivery settled at $112.29 a barrel, gaining 84 cents from the previous day. Oil has rallied this week as the greenback has weakened against other major currencies. A key contributor to the dollar's recent fall was Standard & Poor's announcement Monday that it was revising its long-term U.S. debt outlook from stable to negative.

Since Monday, the euro has strengthened more than two percent against the dollar. In such a case where the dollar weakens against other currencies, oil and other commodities tend to rally because they become a better value for investors holding these other currencies.

Crude oil traded within a range from $111.00 to $112.48 Thursday.

Natural gas also ended the day higher after the U.S. Department of Energy announced a smaller-than-expected increase in the country's natural gas inventories. The federal agency's Energy Information Administration reported that natural gas stocks rose by 47 billion cubic feet last week; analysts had expected a higher increase. A Platts survey of analysts, for instance, had anticipated a build of 49 to 53 Bcf week-on-week.

Given the EIA data, May natural gas increased by a dime to settle at $4.41 per thousand cubic feet Thursday. Gas peaked at $4.42 and bottomed out at $4.27.

May gasoline gained three cents to end the day at $3.31 a gallon. It fluctuated from $3.26 to $3.32 during Thursday's session.