Oil down 2 percent, strong dollar knocks U.S. crude off 15-month highs

Thu Oct 20, 2016 3:53pm EDT
 
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By Ethan Lou

NEW YORK (Reuters) - Oil prices settled down more than 2 percent on Thursday, as a resurgent dollar encouraged players to take profit on the previous day's rally that sent U.S. crude to 15-month highs.

The dollar hit seven-month highs against a basket of currencies .DXY and a three-month peak versus the euro EUR= after the European Central Bank kept interest rates unchanged and U.S. data showed home resales surged in September.

Benchmark Brent crude for December delivery LCOc1 settled down $1.29, or 2.5 percent, at $51.38 per barrel.

U.S. West Texas Intermediate (WTI) crude's November contract CLc1, which expired as the front-month, fell $1.17, or 2.3 percent, to finish at $50.43. WTI's December contract CLc2, which will be front-month from Friday, slid $1.19 to settle at $50.63.

On Wednesday, oil rallied after the U.S. government reported an unexpected drawdown of more than 5 million barrels in weekly crude stockpiles that drove WTI's November contract to a 15-month high of $51.93. [EIA/S]

"This is predominately being driven by the dollar's strength," Matt Smith, director of commodity research New York's ClipperData said, referring to Thursday's retreat.

"It's also to do with the dust settling on yesterday's report and the realization that it wasn't quite as bullish."

Some market participants noted that despite the crude drawdown, the EIA also reported an unexpected build of 2.5 million barrels in gasoline stockpiles instead of the drop that was forecast.   Continued...

 
Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford/File Photo