Crude oil extended losses in Asia today as a stronger US currency discouraged buying in the dollar-priced commodity and concerns over the geopolitical fallout from the downing of flight MH17 in Ukraine eased.
Israel’s operation against Hamas militants in Gaza continued to cause tensions, however, as UN chief Ban Ki-moon urged an end to the conflict which has entered its 16th day.
US benchmark West Texas Intermediate (WTI) for September delivery was down 34 cents to USD 102.05 a barrel in late-morning trade on its first day of trading.
Brent crude for September declined 10 cents at USD 107.23.
The dollar had strengthened yesterday against most other major currencies, especially the euro, as easing US consumer inflation data pointed to the Federal Reserve keeping a steady course on interest rates.
The pace of US inflation slowed in June, the Labor Department reported. The department’s consumer price index rose 0.3 per cent last month, after a hefty 0.4 per cent rise in May.
The dollar stayed firm against the euro in Asia today, with DBS bank saying “there were more upside surprises in US data releases and more downside surprises in Euro Zone data”.
It said that the euro is “also considered geographically vulnerable to geopolitical risks” with the Euro Zone “wedged between the Russia/Ukraine crisis and Israel’s military offensive in Gaza”.
A stronger US currency makes dollar-priced oil more expensive to holders of other units, dampening buying interest and pressuring prices downwards.