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Brent oil trading around $77 mark, eyes on US dollar
Published on February 19, 2010 by oilprices · No CommentsBrent oil futures are trading around the $77 mark on Friday after a surprise rate hike by the Fed in the US sent the US dollar higher against a basket of other currencies. In London on Friday, Brent crude oil futures for April settlement was at $77.74 s a barrel on the ICE Futures Exchange.
“What is undermining oil prices at the moment is the sharp jump in the dollar following the Fed’s announcement,” said Toby Hassall, analyst with CWA Global Markets in Sydney.
“But this is not just about the influence the dollar has on commodities, as there is also the concern of unwinding of stimulus measures, and that could dampen the economic recovery.”
The US dollar rose to a nine-month high against the euro, while the dollar index, a gauge of its performance against six major currencies, rose to its highest level in eight months above 81.250 .DXY, up about 1 percent. A stronger US dollar makes crude oil and other commodities more costly for holders of other currencies.
Crude oil has traded between $69 a barrel and $84 for most of the last six months. “If the dollar keeps rallying, crude oil prices could drop below $70,” said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore.
Tags: brent, Brent oil, dollar, Fed, futures, rate, trading, US