Oil Drops 9% on the Week on Stronger Dollar

Oil Drops 9% on the Week on Stronger DollarOil Drops 9% on the Week on Stronger Dollar

Global oil prices tumbled on Friday and fell 9 percent on the week, hit by a renewed rally in the dollar and a warning by the International Energy Agency (IEA) that the oil glut is growing.

Brent closed at $54.67, down $2.41, or 4.2 percent, on the day. US crude finished at $44.84, down $2.21, or 4.7 percent. Both dropped 9 percent on the week. Brent fell to $45.19 in January, while US crude dropped to $43.48.

Brent’s premium to US crude, a spread that commands one of the biggest volumes in oil, turned volatile, moving from a 10-day high of $11 a barrel to below Thursday’s close of $10, Reuters said in a report.

Data that showed a sharp drop in the number of US rigs drilling for oil failed to inspire market bulls. Benchmark Brent oil settled near a one-month low below $55 a barrel and US crude settled near a 2-1/2 month low under $45, The dollar hit a 12-year high in its march toward parity with the euro, jacking up the cost of oil and other dollar-denominated commodities for holders of other currencies.

Oil began the day lower after the IEA, which advises industrialized countries on energy, warned the global glut was building and the US may soon run out of tanks to store crude.

“US supply so far shows precious little sign of slowing down,” the IEA said. “Quite to the contrary, it continues to defy expectations.”

The only real bullish factor on the day was data from oil services firm Baker Hughes showing the number of rigs drilling for oil in the US fell by 56 this week to 866, the lowest since March 2011. A lower rig count signals a drop in oil output.

News of a US government proposal to buy up to five million barrels of oil for its Strategic Petroleum Reserve also elicited little interest from market bulls.