- Commodity Corner: Oil Falls as Euro Weakens
Friday, September 09, 2011
by Matthew V. Veazey
Light sweet crude oil for October delivery fell below $86.00 a barrel Friday as the U.S. dollar strengthened against the euro.
The WTI bottomed out at $85.64 a barrel before settling at $87.24, still reflecting a day-on-day loss. It peaked at $89.50. The Brent contract price also ended the day lower, settling at $112.77 after trading within a range from $111.09 to $113.89.
A weaker greenback is bullish for crude oil—priced in dollars—because it becomes a better buy for investors holding other currencies. In the case of the euro Friday, the currency weakened amid mounting fears that Greece will default on its debt. The departure of a high-level German official from the European Central Bank Friday contributed to speculation that euro-zone countries will fail to resolve lingering policy disputes that have hindered efforts to resolve debt crises throughout the region.
Equities fell as the euro-zone uncertainty grew, chilling expectations about global demand for oil. The Dow Jones Industrial Average and S&P 500 each lost approximately 2.7 percent while the Nasdaq lost a relatively modest 2.4 percent. President Obama's latest plan to spur job creation in the U.S., presented Thursday night to a joint session of Congress, failed to brighten the demand outlook.
October natural gas also ended the day lower, falling to $3.915 per thousand cubic feet. Gas futures fluctuated from $3.885 to $3.99 during Friday's floor trading.
Front-month gasoline settled at $2.77 a gallon, slightly higher than the $2.76 intraday low. October gasoline peaked at $2.89 Friday.
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