Investing.com - An upbeat U.S. retail sales report strengthened the dollar and weakened oil on Thursday, though losses were seen as limited as the report also fueled hopes for more sustained economic recovery, which should boost demand for fuel and energy.
A stronger greenback tends to make oil a 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 January traded down 0.07% at $60.90 a barrel during U.S. trading, up from a session low of $60.10 a barrel and off a high of $61.67 a barrel.
The January contract settled down 4.51% at $60.94 a barrel on Wednesday.
Support for the commodity was seen at $59.15 a barrel, the low from July 14, 2009, and resistance at $73.56 a barrel, the high from Nov. 28.
The U.S. Commerce Department reported earlier that retail sales rose 0.7% last month, beating expectations for a gain of 0.4%.
October's retail sales growth figure was revised up to 0.5% from 0.3%.
Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy.
Core retail sales, which exclude volatile transportation items, advanced 0.5% in November, easily surpassing forecasts for a 0.1% increase. Core sales in October rose by 0.4%.
Retail sales correspond closely with the consumer spending component of the government's gross domestic product report. Consumer spending accounts for as much as 70% of U.S. economic growth.
Thursday's retail sales numbers boosted expectations for the Federal Reserve to hike interest rates earlier in 2015 than once anticipated, which gave the dollar support and softened oil.
Elsewhere, the U.S. Department of Labor reported that the number of individuals filing for initial jobless benefits in the week ending Dec. 6 fell by 3,000 to 294,000, beating market calls for and increase to 299,000, which also supported the dollar by boosting optimism over the health of the U.S. labor market.
The number of Americans applying for new jobless benefits has held below the 300,000-level for 12 out of the past 13 weeks.
Continuing jobless claims in the week ended Nov. 29 rose to 2.514 million from 2.372 million in the preceding week. Analysts had expected continuing claims to fall to 2.360 million.
The four-week moving average was 299,250, an increase of 250 from the previous week’s total of 299,000. The monthly average is seen as a more accurate gauge of labor trends because it reduces volatility in the week-to-week data.
Still, oil's losses were somewhat limited, as despite the stronger dollar, the commodity found support on expectations for fuel and energy demand to rise as U.S. recovery gains steam going forward.
Separately, on the ICE Futures Exchange in London, Brent oil futures for January delivery were up 0.18% at US$64.56 a barrel, while the spread between Brent and U.S. crude contracts stood at $3.66.