NEW YORK: Oil dropped to a three-month low on Friday as the dollar surged and concerns about global economic growth weighed on demand expectations. The fall came even as Russia sent forces into Georgia, a key energy transit region, to repel a Georgian assault on the breakaway South Ossetia region.
US light crude fell $3.84 to $116.18 a barrel by 22:30 pm IST, after hitting $115.61, the lowest level since early May. The drop added to losses that have sent prices down from a record high over $147 a barrel on July 11. London Brent crude traded down $3.90 to $113.96.
“It seems that we’ve got a lot of selling based on the stronger dollar,” said Peter Beutel, president of trading consultants Cameron Hanover. “Energy demand destruction and the dollar return have formed a quiet alliance to bring the oil market down, and today the louder of the two is the dollar.”
Strong demand from emerging economies like China sent oil on a six-year rally, with prices up seven-fold at their peak. More support came from investors rushing into commodities as a hedge against inflation and the weak dollar.
US light crude fell $3.84 to $116.18 a barrel by 22:30 pm IST, after hitting $115.61, the lowest level since early May. The drop added to losses that have sent prices down from a record high over $147 a barrel on July 11. London Brent crude traded down $3.90 to $113.96.
“It seems that we’ve got a lot of selling based on the stronger dollar,” said Peter Beutel, president of trading consultants Cameron Hanover. “Energy demand destruction and the dollar return have formed a quiet alliance to bring the oil market down, and today the louder of the two is the dollar.”
Strong demand from emerging economies like China sent oil on a six-year rally, with prices up seven-fold at their peak. More support came from investors rushing into commodities as a hedge against inflation and the weak dollar.
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