Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A man walks past storage area for oil barrels in Shanghai. (ALY SONG/Aly Song/Reuters)
A man walks past storage area for oil barrels in Shanghai. (ALY SONG/Aly Song/Reuters)

Oil edges up as the greenback slumps Add to ...

Brent crude edged up and U.S. crude pushed above $112 a barrel Thursday in volatile trading, getting a lift from the greenback's weakness.

Investors bought oil as a hedge against the slumping dollar, which fell for a third straight day, hitting its lowest since 2008 against a basket of currencies. The dollar index neared an all-time low.

More related to this story

Disappointing reports on factory activity and U.S. initial jobless claims cast doubt on the pace of U.S. economic recovery and energy demand growth, limiting oil's gains.

Brent crude for June rose 14 cents to settle at $123.99 a barrel, having earlier pushed up nearly $1 to $124.81, the highest since April 11.

U.S. crude for June rose 84 cents to settle at $112.29, bouncing off a session low of $111. U.S. crude posted a 2.4 per cent weekly gain.

U.S. gasoline futures ended at $3.3086 a gallon, the highest settlement since July 2008 as the summer driving season approaches. U.S. heating oil futures ended lower.

With gasoline prices already $4 a gallon in some states, the Obama administration unveiled a working group of federal agencies to probe potential fraud in the energy markets.

Brent crude's premium to its U.S. counterpart narrowed by 68 cents to $11.72 a barrel by 3:39 p.m. ET in post-settlement trading.

"Brent has lost a little momentum in its rally," said Gene McGillian of Tradition Energy in Connecticut. "But it's still got a big advantage to U.S. crude and that spread is unwinding a bit now."

Oil markets in the United States and Europe will be shut on Friday for a holiday.

U.S. DOLLAR SWOON

The dollar weakened this week after Standard & Poor's cut its outlook for U.S. government debt to negative, leading some foreign exchange analysts to tout the euro's potential as an alternative reserve currency.

A weaker dollar can lift dollar-denominated oil prices by making oil less expensive for consumers using other currencies and by drawing investment away from foreign exchange markets seeking better returns.

Both Brent and U.S. prices had rallied on Wednesday after the U.S. government reported crude oil and refined products inventories fell.

AFRICA/MIDDLE EAST TURMOIL

Threats to supply in Africa and the Middle East remain and election turmoil in Nigeria and unrest in Yemen kept the uncertainty in focus.

Muammar Gadhafi's forces attacked a rebel-controlled oil pumping station in eastern Libya, an official with an insurgent-run oil company said.

JOBLESS CLAIMS, FACTORY DATA DISAPPOINT

A note of caution about oil demand was sounded by a report showing that while U.S. initial jobless benefit claims fell last week, they stayed above the key 400,000 level, indicating possible loss of momentum in any jobs recovery.

Also a concern, the pace of U.S. Mid-Atlantic region factory activity fell more than expected in April. It expanded in March at its fastest pace in 27 years.

The International Energy Agency's Chief Economist Fatih Birol said oil producing nations need to reassure the market after unrest in the Middle East and worries about supply disruptions pushed crude prices higher.

Follow us on Twitter: @GlobeBusiness

 

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories