Oil Prices Decline Amid Dollar Strength and Bin Laden's Death

The US dollar's strengthening on Tuesday triggered a decline in oil futures as traders sought a safe-haven amid worries of reprisals following Osama bin Laden's death. Light, sweet crude for June delivery fell 68 cents to $112.84 a barrel, while Brent crude on the ICE futures exchange fell $1.04 to $124.08 a barrel. Investors moved out of riskier currencies such as the euro and Australian dollar, weighing on oil prices as the dollar-denominated commodity becomes more expensive to holders of other currencies.

Key Takeaways:

• Oil futures declined on Tuesday as the US dollar strengthened, with light, sweet crude for June delivery falling 68 cents to $112.84 a barrel.
• Investors sought a safe-haven in the greenback amid worries of reprisals following bin Laden's death, causing a decline in oil prices.
• The ICE Dollar Index rose 0.1% to 73.107, indicating a strengthening of the dollar against a basket of major currencies.
• Many analysts conclude that bin Laden's death will have an indirect impact on oil prices, with market participants more concerned about fundamental indicators such as the pace of the economic recovery in the US.
• Markets will be watching the first-quarter growth figures, non-farm payrolls report, and oil and fuel product inventories for signs of improvement in the labor market and oil demand.
• Analysts expect an increase of oil supplies of 1.9 million barrels, with gasoline supplies seen rising by 300,000 barrels and distillates climbing 800,000 barrels.

Statistics:

• Oil futures declined by $0.68, or 0.6%, to $112.84 a barrel.
• Brent crude on the ICE futures exchange fell $1.04, or 0.8%, to $124.08 a barrel.
• Investors moved out of riskier currencies, with the US dollar index rising by 0.1% to 73.107.
• Market participants are expecting an increase of oil supplies of 1.9 million barrels, with gasoline supplies seen rising by 300,000 barrels and distillates climbing 800,000 barrels.

Sources:

• Dow Jones Commodities News via Comtex, May 3, 2011
• Dow Jones Newswires; 212-416-2818; dan.strumpf@dowjones.com, Copyright (c) 2011 Dow Jones & Company, Inc.