WTI, Brent extend losses as dollar rallies on Draghi comments

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Investing.com - Oil futures fell sharply on Thursday, as the dollar rallied to a more than two-year high against the euro after European Central Bank President Mario Draghi said that the bank was unanimously committed to use unconventional measures if needed.

On the New York Mercantile Exchange, crude oil for delivery in December lost $1.09, or 1.39%, to trade at $77.59 a barrel during U.S. morning hours.

Elsewhere, on the ICE Futures Exchange in London, Brent for December delivery traded at $82.28 a barrel, down 68 cents, or 0.78%.

A day earlier, London-traded Brent futures fell by as much as 1.4% to hit $81.64 a barrel, a level not seen since October 2010.

The dollar climbed to the highest level since August 2012 against the euro after ECB President Mario Draghi said it will soon start purchases of asset backed securities and indicated that further unconventional measures are on the way.

The greenback got a further boost after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits decreased by 10,000 to 278,000 last week. Analysts had expected jobless claims to fall by 3,000 to 285,000 last week.

The number of Americans applying for new jobless benefits held below 300,000 for the eighth consecutive week, signaling the recovery in the labor market is gaining momentum.

Continuing jobless claims in the week ended October 25 fell to a 14-year low of 2.348 million. Analysts had expected continuing claims to decline to 2.360 million from 2.387 million in the preceding week.

The four-week moving average was 279,000, the lowest since April 2000. The monthly average is seen as a more accurate gauge of labor trends because it reduces volatility in the week-to-week data.

Investors now looked ahead to the release of the latest U.S. nonfarm payrolls report on Friday, for further indications on the strength of the recovery in the labor market.

Market analysts expect the data to show that the U.S. economy added 231,000 jobs in October, after a gain of 248,000 in September.

The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.53% to hit a four-year peak of 88.01.

A stronger dollar makes U.S. commodities more expensive for buyers holding other currencies.

London-traded Brent prices have fallen nearly 28% since June, when it climbed near $116, while WTI futures are down almost 27% from a recent peak of $107.50 in June.

Concerns over weakening global demand combined with indications that the Organization of the Petroleum Exporting Countries will not cut output to support oil markets have weighed on prices in recent weeks.

Some market analysts believe that only a cut in production by the oil cartel will halt the decline in prices.

Oil ministers from the 12-member group are scheduled to meet in Vienna on November 27 to consider whether to adjust their production target for early 2015.

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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.

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