Strong dollar drives oil lower; gas price at $3.22
Crude oil drops to near $94 a barrel as ECB rate cut boosts dollar; US pump price falls again
The price of oil fell Thursday, as an unexpected rate cut by the European Central Bank strengthened the dollar and OPEC said global supplies of oil are abundant.
Benchmark U.S. crude for December delivery fell 60 cents to $94.20 a barrel on the New York Mercantile Exchange. Brent crude, the international benchmark, fell more sharply, dropping $1.78, or 1.7 percent, to $103.46 a barrel on the ICE Futures exchange in London.
Aiming to encourage Europe's modest growth rate, the ECB cut its benchmark interest rate to a record low 0.25 percent, a move not generally expected until at least next month.
The cut weakened the euro and strengthened the dollar, making commodities like crude more expensive for traders using currencies other than the U.S. currency. The euro was down to $1.3365 from $1.3520 before the rate cut was announced.
A report from some of the world's key oil producers forecasting rising energy supplies in the coming years also weighed on prices.
The Organization of Petroleum Exporting Countries said it expects demand for its crude oil to fall to 29.2 million barrels a day in 2018 from 30.3 million barrels a year this year. OPEC said rising supplies from other sources, such as Canadian oil sands, crude from Latin America and the increased use of biofuels would contribute to the fall in demand for its own output.
"This year's (report) demonstrates again that there is no shortage of oil and resources are plentiful," OPEC Secretary General Abdullah Al-Badry said in the group's 2013 World Oil Outlook report.
OPEC also predicted that global oil demand would rise from 81.2 million barrels a day in 2013 to 89.7 million barrels a day in 2020 and 100.2 million barrels a day in 2035. At the same time, renewables and other fuels will cut into oil's share of global energy use, from 32.2 percent in 2010 to 26.3 percent in 2035.
In the U.S., drivers are being treated to lower gas prices. The average price for a gallon of gas fell a penny to $3.22. That matches the lowest price for all of last year. AAA said earlier this week that it expects the national average will drop as low as $3.10 per gallon before the end of the year, with prices in some states going below $3 per gallon as the holidays approach.
In other energy futures trading on Nymex:
— Wholesale gasoline fell 4 cents to $2.50 a gallon.
— Heating oil lost 3 cents to $2.84 a gallon.
— Natural gas gained 2 cents to $3.52 per 1,000 cubic feet.