Oil Prices Decrease as US Dollar Strengthens and Oil Rig Count Drops

The Wall Street Journal reported that the oil prices took a dive on Friday as the US oil rig date showed another slight decline and the US dollar gained strength.

As quoted in the market news:

Light, sweet crude for July delivery recently fell $1.07, or 1.7%, to $59.65 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell $1.17, or 1.8%, to $65.37 a barrel on ICE Futures Europe.

Moves in the oil price have closely tracked the dollar in recent weeks, with some analysts attributing nearly all of a recent rally in oil prices to a weakening in the dollar. The global crude market remains oversupplied, and some analysts warn that the rally was unsustainable and oil prices are likely to slump from current levels later this year.

The dollar rose Friday after the Labor Department said that U.S. consumer prices rose for the third straight month in April. The WSJ Dollar Index, which tracks the greenback against other major currencies, recently rose 0.6%.

A strong dollar makes oil, which is priced in dollars, more expensive to foreign buyers.

”We continue to emphasize the importance of daily U.S. dollar swings as a significant driver of oil pricing,” said energy-advisory firm Ritterbusch Associates in a note.

Analysts also anticipate strong U.S. driving demand during the Memorial Day weekend holiday, the unofficial start to the summer-driving season. U.S. driving has picked up in recent months due to cheaper gasoline and a strengthening economy.

Click here to read the full The Wall Street Journal report.