BANGKOK (AP): Oil prices fell below US$126 a barrelFriday in Asia, extending a decline of more than US$4 in the previous session as a stronger dollar and falling demand outweighed a huge unexpected drop in U.S. crude oil stocks.
The U.S. Energy Department's Energy Information Administration said delays in unloading oil tankers along the Gulf Coast had led to the 8.8 million-barrel drop in crude oil inventories for the week ended May 23, and that explanation helped to lessen the impact of its report. Analysts surveyed by Platts had expected a gain of 750,000 barrels, and usually such a discrepancy would send prices soaring.
"The impact of it was lost," said David Moore, commodity strategist with the Commonwealth Bank of Australia in Sydney. "Their explanation for the decline of the crude inventories really countered the impact of the actual number."
Traders instead focused on gains in the U.S. dollar, analysts said, which hit a three-month high against the yen overnight and held near 105.50 in Asia currency trading in Tokyo. And late in the day, the euro continued to sink against the dollar, dropping belowUS$1.55.
Investors who buy commodities such as oil as a hedge against inflation when the dollar is falling tend to sell when the greenback strengthens. Also, a stronger dollar makes oil more expensive to investors dealing in foreign currencies.
Late afternoon in Singapore, light, sweet crude for July delivery was down US$1.19 at US$125.43 a barrel in electronic trade on the New York Mercantile Exchange.
