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Oil falls on disappointing data, stronger dollar

Oil falls on disappointing data, stronger dollar

Oil fell again Tuesday after disappointing reports on factory production and new home construction raised more concerns about the economic recovery and future demand. The dollar rose against other currencies as well, pushing down crude.
Benchmark crude for June delivery lost $1.55 at $95.82 per barrel in midday trading on the New York Mercantile Exchange.
In London, Brent crude for June delivery fell $1.95 to $108.89 on the ICE Futures exchange.
The price of oil has dropped about 14 percent from a high of $113.52 on May 2.
The Federal Reserve said factory production fell 0.4 percent in April, its first decline in 10 months. A key reason was a drop in auto manufacturing after the Japan earthquake and tsunami led to a parts shortage. Overall, industrial production has risen nearly 11.5 percent since hitting a recession-low in June 2009 but is still about 7.5 percent below its pre-recession peak in September 2007.
Meanwhile the Commerce Department reported that new home construction fell 10.6 percent last month from March. Much of the decline occurred because apartment and condominium construction plummeted. The seasonally adjusted rate fell to 523,000 homes per year, which is less than half the 1.2 million homes per year that economists consider a sign of a healthy market.
Oil also lost ground Tuesday as the dollar strengthened against other currencies. The dollar got a boost from Europe's debt woes, particularly worries that more will have to be done to rescue the Greek economy. Since commodities like oil are priced in dollars, a weaker dollar makes them more of a bargain for buyers who use foreign currencies, so the price falls.
Investors also are concerned about China's efforts to slow its economy and keep inflation under control. China is the world's second biggest oil consumer behind the U.S., and traders are concerned about diminishing demand.
"The rationale for justifying $100 oil is taking on water," oil analyst Stephen Schork said.
The good news for motorists is that lower oil prices are translating into lower prices at the pump. The national average for regular gasoline was $3.944 a gallon (almost a dollar a liter) on Tuesday. That's about 4 cents less than on Friday but 11.7 cents more than a month ago, according to AAA, Wright Express and the Oil Price Information Service.
In other Nymex trading in June contracts, heating oil fell 5 cents to $2.8262 per gallon (3.79 liters), gasoline futures lost 5 cents to $2.8831 a gallon (3.79 liters) and natural gas fell 14 cents to $4.242 per 1,000 cubic feet (28.32 cubic meters).


Updated : 2021-05-17 03:22 GMT+08:00