Oil price steady as US dollar dips, crude oil supplies lower

Oil prices remain steady in Thursday trading as the US dollar weakened against the euro and a government report showed an unexpected drop in US crude oil supplies, boosting optimism about a demand recovery in the biggest energy consuming nation.

Oil pared yesterday’s 1.9 percent fall as the dollar declined, increasing the appeal of commodities as an alternative investment. Prices were also supported by a report from the Energy Information Administration, which showed crude stockpiles fell 978,000 barrels last week. A 2 million-barrel gain was forecast in a Bloomberg analyst survey.

“General weakness in the U.S. dollar is supporting oil,” Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said by telephone. Oil “came off last night but is finding support today.”

Crude oil for November delivery gained 63 cents, or 0.9 percent, to $70.20 a barrel in electronic trading on the NYMEX at 12:22 p.m. Sydney time. Yesterday, the contract dropped $1.31 to settle at $69.57. Prices have gained 57 percent since the start of the year.

The drop in crude supplies “is probably something the market has moved on,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne. “Alcoa reported much better-than-expected earnings after US markets closed, and that is something that could be playing into stock market futures and the oil price.”

Tags:  crude oil supplies, oil price