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Crude plummets on soft U.S. supply data, rising dollar

CommoditiesMay 10, 2013 12:15PM ET
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Investing.com - Oil prices plummeted on Friday as investors snapped up dollar positions and shunned the commodity in wake of Thursday's soft supply data.

A firming greenback makes oil an increasingly expensive commodity in dollar-denominated exchanges, especially in the eyes of investors holding other currencies.

On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded down 2.53% at USD93.95 a barrel on Friday, off from a session high of USD96.24 and up from an earlier session low of USD93.39.

The dollar rose as investors sought a safe and liquid venue to await a Group of Seven meeting of finance ministers and central bankers to begin.

Talk of unwinding stimulus measures gave the greenback support, as did softer-than-expected Italian industrial output numbers.

Italy reported earlier that industrial output dropped 0.8% in March after contracting 0.9% in February.

Analysts were expecting a 0.2% contraction in output at the country's factories, mines and utilities.

The news not only strengthened the dollar but also curbed demand for oil by stoking fears Europe will demand less fuels and energy than once hoped.

U.S. inventory data released on Thursday also fueled the selloff.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 230,000 barrels in the week ending May 3, well below market expectations for an increase of 1.9 million barrels, prompting investors to conclude that demand is not keeping pace with supply.

Total U.S. crude oil inventories stood at 395.5 million barrels as of last week, the highest level since 1982.

Elsewhere on the ICE Futures Exchange, Brent oil futures for June delivery were down 2.17% at USD102.20 a barrel, up USD8.25 from its U.S. counterpart.









Crude plummets on soft U.S. supply data, rising dollar
 

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