By Timothy Puko And Biman Mukherji
Oil prices are slumping to multi-month lows again Friday, but
have pared losses as they mimic a topsy-turvy trading for the
dollar.
Light, sweet crude for September delivery recently fell 1.5%,
$47.79 a barrel on the New York Mercantile Exchange. Brent, the
global benchmark, rose 0.9%, to $52.82 a barrel on ICE Futures
Europe. Both had briefly rebounded all the way to small gains
Friday before resuming their retreat.
The oil markets have been sinking because of a worldwide glut,
but they have also been heavily influenced by the dollar for
months, frequently making short-term moves in the opposite
direction. Oil is priced in dollars and it becomes more expensive
for holders of other currencies as the greenback appreciates.
The dollar slid against the euro Friday after a quarterly
measure of U.S. labor costs indicated stagnating wages, casting
some doubt on the Federal Reserve's plans to raise rates in the
coming months. The Wall Street Journal's dollar index has jumped
sharply to a four-month high in recent sessions, which helped push
oil lower to start Friday's trading.
"The dollar effect is usually very short and unlikely to cause a
trend downward," said Daniel Ang, an investment analyst at Phillip
Futures. "Prices are unlikely to fall much further."
The longer-term push in oil has been the flood of oil hitting
the global markets and growing concerns that China, one of the
world's largest consumers, won't help absorb it. Trading earlier
this week pushed U.S. oil to a four-month low and Brent to a
six-month low
The added losses on Friday have put U.S. crude down nearly 20%
in July, and Brent down nearly 17%.
High international supplies have kept prices under pressure and
increased competition among producers, who are taking cost-cutting
measures. But few have ventured to cut production.
Comments by Abdalla Salem el-Badri, secretary general of the
Organization of the Petroleum Exporting Countries, on Thursday have
done little to reassure the market that the oil glut will be
tackled any time soon. Mr. el-Badri was in Moscow for talks with
Russia's energy minister, Alexander Novak.
"OPEC shows absolutely no sign of blinking," said David Hufton,
of PVM Oil Associates in London. The secretary general believes an
increase in oil demand will support prices, and will absorb any
additional oil exports from Iran, said Hufton. "Unfortunately for
OPEC the data, such as it is, does not support this view."
The world will be entering 2016 with a record high level of
global stocks, and average surplus is expected to be around 1.5
million barrels a day, he said.
Gasoline futures recently rose 1% to $1.8452 a gallon. Diesel
futures fell 0.3% to $1.5931 a gallon.
Matthew Cowley and James Ramage contributed to this article.
Write to Timothy Puko at tim.puko@wsj.com and Biman Mukherji at
biman.mukherji@wsj.com