Shutterstock photo
Markets

Oil turns lower as stronger dollar leads to profit-taking

Shutterstock photo

Shutterstock photo

Investing.com -

Investing.com - Crude oil futures erased gains in choppy trade on Thursday, as a broadly stronger U.S. dollar prompted market players to lock in gains from a recent rally which took prices to the highest level of the year.

On the New York Mercantile Exchange, crude oil for June delivery fell 76 cents, or 1.25%, to trade at $60.17 a barrel during U.S. morning hours after hitting an intraday peak of $61.31.

A day earlier, Nymex oil rallied to $62.58, the most since December 10, before ending at $60.93, up 53 cents, or 0.88%.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.4% to trade at 94.57 early Thursday, turning higher after hitting an overnight low of 93.98.

The dollar found support after data showed that the number of people who filed for unemployment assistance in the U.S. rose less than expected last week.

In a report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending May 2 rose by 3,000 to 265,000 from the previous week's total of 262,000. Analysts had expected initial jobless claims to rise by 18,000 to 280,000 last week.

The data eased concerns over the strength of the U.S. job market after payroll processing firm ADP said on Wednesday that U.S. non-farm private employment rose by 169,000 last month, below expectations for an increase of 200,000.

Investors were now looking ahead to Friday's employment report for further indications on the health of the U.S. job market.

Nymex oil futures were higher earlier in the session as concerns over a supply glut eased after the first drawdown in U.S. crude inventories since January.

The U.S. Energy Information Administration said Wednesday that crude oil inventories fell by 3.9 million barrels last week to 487.0 million, compared to expectations for an increase of 1.5 million barrels to 492.4 million.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, fell for the second consecutive week, dropping by 12,000 barrels to 61.7 million.

U.S. oil futures are up nearly 40% since hitting a recent low on March 18 amid mounting expectations that U.S. shale oil production has peaked and may start falling in the coming months amid an ongoing collapse in rigs drilling for oil.

According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by 24 last week to 679, the 21st straight week of declines and the lowest level since September 2010.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for June delivery slumped 58 cents, or 0.86%, to trade at $67.19 a barrel. On Wednesday, London-traded Brent futures rose to $69.63, a level not seen since December 5, before closing at $67.77, up 25 cents, or 0.37%.

Brent prices remained supported by concerns over a disruption to supplies from Libya and after Saudi Arabia raised crude prices to buyers in Asia earlier in the week.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $7.02 a barrel, compared to $6.84 by close of trade on Wednesday.

Investing.com offers an extensive set of professional tools for the financial markets.

Read more News on Investing.com and download the new Investing.com apps for Android and iOS!

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

ForEx