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Crude Oil Ends Higher On Weak Dollar; Drops 3.3% For Week

3/30/2012 2:59 PM ET

U.S. crude oil futures rebounded Friday to close higher, as the dollar weakened on developments in Europe and some encouraging consumer spending data from the U.S. In Europe, the euro area finance ministers agreed to raise the lending capacity of its rescue funds, while Spain revealed its budget plans with massive spending cuts to steady the faltering economy.

Light Sweet Crude Oil futures for May delivery, gained $0.24 or 0.2 percent to close at $103.02 a barrel on the New York Mercantile Exchange Friday.

Crude prices scaled a high of $104.15 a barrel intraday and a low of $102.78.

Crude oil prices shed about 3.3 percent for the week, but gained 4.2 percent for the quarter.

Yesterday, oil ended sharply lower at a 6-week low after the Saudi Arabian oil minister confirmed his country would be able to up oil production to check soaring prices. Oil prices were also impacted by a massive build-up in U.S. crude stockpiles as per the Energy Information Administration yesterday.

In a significant development, eurozone finance ministers agreed to raise the limits of its bailout funds to check any further spread of the debt crisis to member states. The euro made gains after the group decided to lift the current overall lending limit of the European Stability Mechanism and European Financial Stability Facility to euro 700 billion or $934 billion on Friday.

The euro also found further support after Spain revealed a euro 27 billion or $36 billion cut in its annual budget to enforce much-needed austerity measures. The major changes include freeze in public sector salaries and a 16.9 percent reduction in departmental budgets.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 78.905 on Friday, down from 79.176 in North American trade late Thursday. The dollar scaled a high of 79.05 intraday, with a low of 78.73.

The euro was trading higher against the dollar at $1.3332 on Friday, as compared to $1.3249 late Thursday. The euro had scaled a high of $1.3375 intraday with a low of $1.3296.

In economic news, the U.S. Commerce Department said personal spending rose by 0.8 percent in February following an upwardly revised 0.4 percent increase in January. Economists expected spending to increase by 0.6 percent compared to the 0.2 percent growth that had been reported for the previous month.

Meanwhile, personal income edged up by 0.2 percent in February, matching the downwardly revised increase seen in the previous month. Personal income had been expected to increase by 0.4 percent.

In the eurozone, inflation slowed less than expected in March, flash estimate published by Eurostat showed. Annual inflation fell to 2.6 percent in March from 2.7 percent in February. Economists were expecting the rate to ease to 2.5 percent. Inflation continues to stay above the European Central Bank's 'below, but close to 2 percent' target.

Germany's retail trade turnover declined unexpectedly in February, data from the Federal Statistical Office showed. Retail sales fell 1.1 percent month-on-month in real terms in February, following a 1.2 percent drop in January. Economists expected 1.2 percent increase in sales for February.

by RTT Staff Writer

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