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Crude drops as dollar firms on U.S. data, end of Fed stimulus

Published 10/30/2014, 12:49 PM
Updated 10/30/2014, 12:51 PM
Oil drops as dollar strengthens on U.S. growth data, end of Fed quantitative easing program

Investing.com - Crude oil futures fell on Thursday after upbeat U.S. growth data and a Federal Reserve decision to close its monthly bond-buying program bolstered the dollar.

A stronger greenback makes oil and less attractive commodity on dollar-denominated exchanges, especially in the eyes of investors holding other currencies.

In the New York Mercantile Exchange, West Texas Intermediate crude oil futures for delivery in December traded down 1.34% at $81.10 a barrel during U.S. trading, up from a session low of $80.81 a barrel and off a high of $82.09 a barrel.

The December contract settled up 0.96% at $82.20 a barrel on Wednesday.

Support for the commodity was seen at $79.44 a barrel, Monday's low, and resistance at $82.88 a barrel, Wednesday's high.

The Commerce Department reported earlier that the U.S. gross domestic product grew at an annual rate of 3.5% in the three months to September, beating forecast for 3% growth, which fueled demand for the greenback on expectations that the Federal Reserve remains set to hike interest rates in 2015.

On Wednesday, the Federal Reserve said it was ending its monthly bond-buying program due to improvements taking place in the labor market, which also sent the greenback posting gains at oil's expense.

Ongoing concerns that the world remains awash in crude pressured prices lower as well, as Asian and European economies are facing headwinds, which are offsetting the bullish effects U.S. recovery would otherwise have on oil.

Separately, on the ICE Futures Exchange in London, Brent oil futures for December delivery were down 0.79% at US$86.44 a barrel, while the spread between Brent and U.S. crude contracts stood at $5.34.

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