Commodity Daily News

USD Gains Causes Crude Oil Prices to Slide

Crude Oil prices dropped below $66 a barrel yesterday after a U.S. government report showed the world's top energy consumer's demand slowed even further. Crude Oil had surged 10% on Tuesday on signs Saudi Arabia, and other OPEC members, had made a cut in the amount of their Oil exports. This move came in compliance with an agreement made last month by OPEC aiming to halt sliding Oil prices.

The downward pressure on the price of Crude Oil came after Obama's victory in the U.S. presidential election, which boosted the U.S. Dollar. A firmer dollar makes Oil more expensive for holders of other currencies, and tends to pressure Crude Oil prices to go lower. Prices also fell because of concern that the U.S. economy, the world's largest consumer of energy, will continue to contract. Companies in the U.S. cut an estimated 157,000 jobs in October, the most in almost six years! The decline in employment was the biggest since November 2002 when the U.S. was emerging from a recession.

Traders should be eyeing news of key U.S. economic indicators, including a government report on weekly jobless claims due today and tomorrow. Moreover, worries that weakened international economic growth will depress Oil demand remains a key dampening influence on Oil prices. If the global economic condition deteriorates more aggressively, Crude Oil prices may extend their decline and fall towards as low as $50 a barrel.