Crude Oil Tumbles $7, Will it Reflect at the Pump?
Thursday, 05 May 2011

Crude oil tumbled the most in two years as U.S. jobless claims climbed, bolstering concern that economic growth and fuel demand will decline. The drop accelerated after the dollar surged against the euro.

Oil fell as much as 7.5 percent after the Labor Department said applications for jobless benefits rose by 43,000 to 474,000 last week, the most since August. The dollar advanced against the euro after European Central Bank President Jean-Claude Trichet said inflation risks will be watched “very closely,” signaling the ECB may wait until after June to raise rates.

“We’ve got a bit of a blood bath going on now,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. “Once the ECB refused to raise rates we saw the dollar take off and the drop in commodities accelerate.”

Crude oil for June delivery fell $6.49, or 5.9 percent, to $102.75 a barrel at 12:31 p.m. on the New York Mercantile Exchange. Futures are heading for the biggest one-day decline since April 20, 2009. Prices are up 28 percent from a year ago.

The decline accelerated at 10:49 a.m. and touched $101.08 at 11:08 a.m., the lowest intraday level since March 18.

The dollar increased as much as 1.7 percent to $1.4577 per euro, the highest level since April 27. A drop in the greenback makes commodities priced in the U.S. currency more attractive for investors.
Euro ‘Pounded’

“The euro is getting pounded and that’s putting pressure on all of the commodities,” said Stephen Schork, president of market consultants The Schork Group Inc. in Villanova, Pennsylvania. “Markets fall faster than they rise.”

 


  

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