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Crude oil futures touch 1-month high on US dollar weakness

Crude oil futures touch 1-month high on US dollar weakness

Crude-oil futures jumped to their highest price in a month Friday after the dollar weakened on a gloomy U.S. housing report.
As data showed new U.S. home sales making their steepest drop in 17 years, traders shrugged off their ramifications for the economy and oil demand to focus on implications for the dollar, whose slide has helped lift crude this year.
"There's certainly nothing bullish about the economic figure," said Jim Ritterbusch, president of Galena, Illinois-based oil trading advisory firm Ritterbusch and Associates. "But for the time being the market has pushed the possibility of a recession to the back burner."
Light, sweet crude for February delivery was recently up $1.01, or 1.1 percent, at $97.63 a barrel on the New York Mercantile Exchange, after rising to $97.85 a barrel, a new one-month intraday high.
Sales of single-family homes decreased by 9.0 percent last month to a seasonally adjusted rate of 647,000, the Commerce Department said Friday. Year over year, new-home sales were 34.4 percent lower than the level in November 2006.
Currency traders responded by pushing the dollar down against the euro and yen. The greenback's weakness makes dollar-denominated oil futures cheaper for buyers using other currencies and blunts the impact of high oil prices outside the U.S.
Crude bested new highs made Thursday after the assassination of former Pakistan Prime Minister Benazir Bhutto led to fears of risks to the oil supply.
The assassination touched off violence that has killed at least 23 people. While Pakistan is not an oil exporter, fears that terrorism there could spill into the Middle East seemed to add a premium in the marketplace.
"If Pakistan becomes a failed state, you're going to see terrorists running around and infiltrating other places: Afghanistan, Iraq, Saudi Arabia," Edward Meir, a Connecticut-based analyst with MF Global, told Dow Jones Newswires. "It's a real festering issue for the markets down the road."
Meir said that concerns about an economic slowdown are valid, but will be "more of a medium-term variable as opposed to a short-term variable."
Oil has also been supported by a sustained decline in U.S. crude stocks, which fell by a surprise 3.3 million barrels last week in its sixth consecutive weekly drop.
Price moves have been exaggerated this week amid light holiday volumes. That leads some analysts to believe oil could test its record intraday high of $99.29, reached Nov. 21.
"Notwithstanding the sharp crude price advance of the past week, significant upside price risk of several dollars still exists and the achievement of $100 crude is once again showing up in the sights of the institutional trading community," Ritterbusch said. "While we still feel that this month's price lows will be taken out after the New Year amid a dramatic upswing in crude inventory levels, we would caution against attempting to pick a top to this rally, at least until the low volume holiday period is passed later next week."
Other energy futures also rose Friday. January heating oil futures rose 1.77 cents to $2.698 a gallon on the Nymex, and February natural gas futures rose 4.8 cents to $7.248 per 1,000 cubic feet.
In London, February Brent crude rose 96 cents to $95.74 on the ICE Futures exchange.
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Gregory Meyer is a correspondent of Dow Jones Newswires.


Updated : 2021-07-25 02:45 GMT+08:00