Oil Slips, Trimming Recent Gains As Dollar Rises

Oil futures dropped in electronic trade Thursday, with a rising dollar offsetting bullish supply data.

Benchmark U.S. oil for August delivery  slipped 14 cents, or 0.1%, to $106.34 a barrel, while rival Brent crude saw its September contract   fall 13 cents, or 0.1%, to $108.48 a barrel.

Oil’s pullback came as the U.S. dollar extended its advance, with the ICE dollar index rising to 82.757 from late Wednesday’s 82.715. A rising U.S. unit can depress dollar-denominated oil futures by making them more expensive to investors holding other currencies.

The losses trimmed a 48-cent advance for Nymex August crude in Wednesday’s New York Mercantile Exchange session after U.S. government data showed a much larger weekly decrease in stockpiles than was expected. The contract is still up about 10% so far in July.

The Energy Information Administration reported a 6.9 million-barrel drop in crude inventories for the week ended July 12, while analysts polled by Platts had on average projected a 2.5 million-barrel fall.

Citi Futures analysts wrote Wednesday that the decrease in supplies was mainly a function of higher refinery runs in the U.S., and that the rise in refinery throughput was itself due to seasonal patterns.

“Refinery runs are at or near their high point for the year and by the end of September could be as much as 1.5 million barrels per day lower,” they wrote.

“Again, we wouldn’t see this as any more than the normal seasonal pattern, but if a normal seasonal increase in crude runs is bullish, then a normal seasonal decline should be bearish, right?” Citi Futures wrote.

In other energy-futures trade, August gasoline  lost a fraction of a cent, remaining around $3.11 a gallon, while August heating oil  gained about a penny, or 0.2%, to trade at $3.08 a gallon.

Natural gas for August  held steady at $3.63 per million British thermal units.

Source : Marketwatch