Oil dips from 31-month high

Crude oil slipped after touching a 31-month high before slipping as US equities declined and the dollar erased losses against other major currencies.

Oil and the Standard & Poor’s 500 Index dropped for the first time in a week as Kimberly-Clark Corp. cut its profit forecast and shares of commodity producers decreased. Crude failed to maintain gains after reaching $US113.48 a barrel, the highest intraday price since September 22, 2008.

“We’re reacting to the S&P 500 and the US dollar,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We have people adjusting their risk positions continually” as prices touched technical levels.

Oil for June delivery slipped 1 cent to settle at $US112.28 a barrel on the New York Mercantile Exchange. Futures have risen 32 per cent in the past year.

The S&P 500 fell 0.1 per cent to 1335.88 in New York, and the Dow Jones Industrial Average dropped 22.86 points, or 0.2 per cent, to 12,483.13.

“We hit that high, and people said that’s as high as we’re going to go today, so I’m going to take my profits,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.

The Dollar Index, a gauge of the US currency against six counterparts such as the euro and the yen, rose as much as 0.2 per cent to 74.268. It slipped 0.2 per cent to 73.985. The index has fallen 6.4 per cent this year.

Commodities slip

“The weak dollar is really continuing to be the primary driver,” said Kyle Cooper, director of research for IAF Advisors in Houston. “You’re seeing a run into gold and silver as a hedge against all the major currencies, and into oil as well, and all the other commodities.”

Earlier, oil jumped as gold and silver climbed to records and other commodities advanced as alternative investments to a weakening US dollar. Precious metals also surged on speculation that China will increase purchases to diversify its foreign-exchange reserves.

The S&P GSCI Total Return Index of 24 commodities increased to 752.13 from 752.06 on April 21, data compiled by Bloomberg show. It has risen 2.5 per cent in the past week.

Futures also advanced after Syrian security forces stormed the city of Daraa, killing at least five people, while unrest in Yemen showed no sign of ending.

Brent falls

Oil has advanced 23 per cent this year, stoked by turmoil in the Middle East and North Africa that has toppled leaders in Egypt and Tunisia and spread to Libya, Algeria, Bahrain, Iran, Oman, Syria and Yemen. Libyan crude output, which averaged 1.6 million barrels a day last year, fell to 390,000 barrels a day in March, according to a Bloomberg News survey.

Brent crude oil for June settlement fell 33 cents, or 0.3 per cent, to $US123.66 a barrel on the London-based ICE Futures Europe exchange. Most European countries have a public holiday today for Easter Monday.

Brent crude for June was at a premium of $US11.38 a barrel to New York futures settling in the same month. The premium has shrunk $US2.54 from a week earlier as supplies fell at Cushing, Oklahoma, the delivery point for West Texas Intermediate futures. Inventories dropped 770,000 barrels to 41.1 million in the week ended April 15, the Energy Department said on April 21.

Chinese growth

Oil also fell as China’s banking regulator set capital targets for the nation’s five biggest lenders above the minimum 11.5 per cent ratio amid concern that credit risks may rise, three people with knowledge of the matter said.

The move by China, the world’s fastest-growing oil consumer and the largest except for the US, may help policy makers curb loan growth after inflation accelerated and real estate prices rose following a $US2.7 trillion two-year credit boom.

The central bank this month raised the amount of deposits lenders must set aside to the highest in at least two decades, while the banking regulator ordered a new round of stress tests on property loans.

Bullish bets on crude climbed in the past week, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. Net-long positions in oil increased 8,337 futures and options combined, or 3 per cent, to 289,916, according to the CFTC report.

US crude inventories fell 2.32 million barrels to 357 million, the first drop since February, the Energy Department said.

Oil volume in electronic trading on the Nymex was 309,870 contracts in New York. Volume totaled 420,991 contracts April 21, 46 per cent below the average of the past three months. Open interest was 1.55 million contracts. US financial markets were closed April 22 for Good Friday.

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