Commodity Daily News

Oil Declines below $82 on Stronger Dollar

Oil prices slid nearly 1% on Wednesday, pressured by a rally in the dollar as doubts increased among investors about the size of a much talked about U.S. economic stimulus move by the Federal Reserve. The U.S government data that showed a surprise drawdown of 4.4 million barrels in gasoline stocks last week, against forecasts that motor fuel supplies rose, helped limit losses.

Overall, the latest data that showed that domestic crude inventories fell 5 million barrels, much more than forecast, though less than Tuesday's industry report of a 6.4-million-barrel increase, disappointed investors. The negative correlation between the dollar and the price of oil was near its strongest level in 14 months in the run-up to the Fed meeting on November 2-3, when it is expected to detail how much money will be pumped into the U.S. economy.

A stronger dollar can pressure oil prices by making dollar-denominated oil dearer to users of other currencies and by pulling investment into other markets from commodities, which are viewed as riskier bets.