Oil tumbles on stronger dollar

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Crude oil futures plunged in the domestic and overseas market on Friday as investors and speculators exited positions in the energy commodity as a spike in the US dollar post an upbeat US jobs data curbed the demand for the fuel as an alternative asset.

Stronger greenback makes crude oil more expensive for those holding other currencies, thus dimming demand.

Investors cast aside data which showed a thirteenth straight drop in US oil rig count which may signal lower production that may help ease a global supply glut. The number of US oil rigs in operation fell by 64 to 922 in the week ended March 6, 2015, Baker Hughes said.

The dollar surged after payrolls in the US climbed by 295,000 in February, following a 239,000 increase in January 2015, capping off the twelfth straight month of above 200K job gains, signaling a pickup in the labour market recovery of the world's biggest economy. The jobless rate ticked down to 5.5 per cent in February 2015, the lowest in almost seven years, from 5.7 per cent in January.

Meanwhile, US trade deficit narrowed from a two-year high of USD 45.6 billion in December, to USD 41.8 billion in January, while US consumer credit climbed by USD 11.6 billion in January from December, when it increased by USD 17.9 billion.

Oil may extend a decline today as a slump in Chinese imports last month signaled a weak demand outlook.

At the MCX, Crude oil futures, for the March 2015 contract, closed at Rs 3,138 per barrel, down by 2.30 per cent, after opening at Rs 3,209, against the previous close price of Rs 3,212. It touched an intraday low of Rs 3,121 till the closing.

Story first published: Monday, March 9, 2015, 12:40 [IST]
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