By midday in Europe, benchmark crude for December delivery fell 84 cents to $80.53 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.25 to settle at $81.37 on Wednesday as the dollar fell to its lowest since August 2008. Crude is traded using dollars, so its price goes down when the dollar goes up.
The euro fell to $1.4975 on Thursday from $1.4999 the previous day and the dollar rose to 91.34 Japanese yen from 91.00 yen.
Traders also eyed a smaller than expected rise in US crude supply data from the Energy Information Administration on Wednesday. Inventories rose 1.3 million barrels while analysts had expected a rise of 2.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
“While there have been some bullish signals from changes in US inventory data, inventory levels around the world are still at record highs -- both on and offshore,” Johannes Benigni, managing director of JBC Energy in Vienna, said in a market report. “It is hard to imagine oil market fundamentals being much weaker than they are at the moment,” Benigni added. “We therefore expect that oil prices will decline again in the coming weeks.”
The two-week surge in the oil price has raised the specter that a jump in energy costs would fuel inflation and lead policymakers to ease stimulus spending and raise interest rates, undermining a nascent global economic recovery. “It’s definitely a potential threat,” said David Cohen, director of Asian economic forecasting for consultancy Action Economics. “Everybody gets a little nervous when the oil price starts bouncing higher.”
