The WSJ reports,"oil prices fell to the lowest point in more than two weeks Thursday, as the strength of the U.S. dollar weighed on prices and global supplies remained ample.
Light, sweet crude for September delivery recently traded down 81 cents, or 0.8%, to $99.46 a barrel on the New York Mercantile Exchange, up from a two-week intraday low of $99.09 a barrel. Brent crude on ICE Futures Europe fell 23 cents, or 0.2%, to $106.28 a barrel.
The dollar has strengthened among a basket of other currencies due to unexpectedly strong U.S. economic indicators, including a better-than-expected reading of gross domestic product for the second quarter. A strong dollar weakens buying appetite because crude is priced in dollars and becomes more expensive to the rest of the world when the U.S. currency strengthens".
"The dollar continues to push higher. I think that that brings more liquidation selling in crude," said Gene McGillian, broker and analyst at Tradition Energy in Stamford, Conn.
Even with ongoing violence in various regions, including Ukraine, Iraq and Libya, oil production has yet to be disrupted and global supplies remain high.
"Despite all of the evolving geopolitical issues, the market is still viewing the overall global supply and demand balances as amply supplied, with no shortages of oil anyplace in the world," said Dominick Chirichella, analyst at the Energy Management Institute, in a note.
Speculative traders, including hedge funds, pension funds and managed-money funds, took on record-high bets on rising U.S. and global oil prices last month after an insurgency broke out in Iraq, prompting fears of a large supply disruption. Now those traders may be closing out their bets, pushing prices lower, Mr. McGillian said.
"In our rush to nine-month highs [in June], the market brought on a record amount of speculative length, and I think that's where the selling pressure is coming from," he said.
