NEW YORK -- Crude oil ended lower after tumbling near 100 U.S. dollars a barrel for the first time in five months on Thursday as a strong dollar overshadowed supply concern caused by the Hurricane Ike.
Light, sweet crude for October delivery dropped 1.71 dollars to settle at 100.87 dollars a barrel on the New York Mercantile Exchange. Prices initially fell in the morning session and slid to as low as 100.10 dollars a barrel, the lowest point in more than five months.
The dollar continued its rally and rose to a one-year high against the euro. The dollar also gained strongly against the sterling pound and the Japanese yen. The strengthening dollar reduced the appeal of commodities like crude to be used as hedges against inflation.
Meanwhile, the market is still concerned about the weak demand for energy. The U.S. Energy Department reported a 2 percent, or 58billion cubic feet, increase in the U.S. natural gas inventory during the week ended September 5.
Crude futures pared some losses in the afternoon session as the Hurricane Ike, which is expected to make landfall along the U.S. Texas coast on Saturday, has forced several refineries in the region to shut down. But many see two digit of oil prices highly possible despite the hurricane.
Crude was barely able to stay above the $100 per barrel mark as market participants continued to lightened up on their positions in the commodity, said Wall Street Strategies' senior research analyst Conley Turner.
"The strength of the U.S. dollar is among the primary factors putting pressure on the price of oil as it continued to gain against other major currencies," said Turner, "Also, slackening demand due to a slowing US and global economy has resulted in the price decline."
"While it may very well fall below 100 dollars per barrel and stay there for the rest of the year, it will eventually recover and hard back up to former highs. However right now there is too much short term volatility to consistently and correctly predict price moves on a daily basis." he added.
In London, Brent crude for October delivery fell 1.07 dollars to 97.90 dollars a barrel on the ICE Futures Exchange.
Light, sweet crude for October delivery dropped 1.71 dollars to settle at 100.87 dollars a barrel on the New York Mercantile Exchange. Prices initially fell in the morning session and slid to as low as 100.10 dollars a barrel, the lowest point in more than five months.
The dollar continued its rally and rose to a one-year high against the euro. The dollar also gained strongly against the sterling pound and the Japanese yen. The strengthening dollar reduced the appeal of commodities like crude to be used as hedges against inflation.
Meanwhile, the market is still concerned about the weak demand for energy. The U.S. Energy Department reported a 2 percent, or 58billion cubic feet, increase in the U.S. natural gas inventory during the week ended September 5.
Crude futures pared some losses in the afternoon session as the Hurricane Ike, which is expected to make landfall along the U.S. Texas coast on Saturday, has forced several refineries in the region to shut down. But many see two digit of oil prices highly possible despite the hurricane.
Crude was barely able to stay above the $100 per barrel mark as market participants continued to lightened up on their positions in the commodity, said Wall Street Strategies' senior research analyst Conley Turner.
"The strength of the U.S. dollar is among the primary factors putting pressure on the price of oil as it continued to gain against other major currencies," said Turner, "Also, slackening demand due to a slowing US and global economy has resulted in the price decline."
"While it may very well fall below 100 dollars per barrel and stay there for the rest of the year, it will eventually recover and hard back up to former highs. However right now there is too much short term volatility to consistently and correctly predict price moves on a daily basis." he added.
In London, Brent crude for October delivery fell 1.07 dollars to 97.90 dollars a barrel on the ICE Futures Exchange.
