Oil settled at $110 a barrel after a jump in the dollar against the euro, on Friday. Saudi Arabia’s remarks that markets are sufficiently supplied, prompted investors to reduce positions. However, strong Chinese demand proved helpful.
There was an increase of 14 percent in U.S. light crude for May delivery. However, recently it fell to a low price of $109.49 a barrel, finally settling at $110 by 0709 GMT, reducing by a cent.
There was an increase of 25 cents in London Brent Crude as it reached a price of $108.45 a barrel.
The market reached an all time high $112.21 a barrel on Wednesday after government reports indicated a sudden decline in crude oil and fuel supplies.
According to Gerard Burg, a resource analyst from National Bank of Australia, "It is a continuation of the price volatility and there is a lack of initiative on OPEC to bring on more oil".
The reduction in price was seen after the U.S. currency jumped from an all time low against the euro. European Central Bank President Jean-Claude Trichet was concerned about the high levels of inflation, slow growth and foreign exchange fluctuation.
Recently, a decline in the U.S. currency has compelled investors to purchase commodities in dollars. This has up surged prices of crude oil, gold, metals and grains.
There was a decline in U.S. commercial paper for a second straight week. It shrank to a staggering $1.817 trillion in the week that ended on April 9, reducing by $10.8 billion from a week before; as a weakening economy intensified, the credit market strains affected short-term loan markets.
This shrinking in commercial paper indicates that companies have started to reduce their capital investment and manage their business plans in anticipation of an economic recession in the U.S.
Large crude oil purchases by China, world’s leading energy consumer, limited the losses. The March crude oil imports of China jumped up by one fourth compared to the previous year. They reached a record high of 17.3 million tones.
Ali Naimi, oil minister for Saudi Arabia, Saudi Oil Minister, disapproved consumer countries’ request to increase production. He further added that supplies were sufficient and record high prices were not due to reduced oil production.
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