Oil plunged from a ninety-day high after the U.S. dollar surged, halting investor appetite for commodities.
Futures pulled back as the Bloomberg Dollar Spot Index rose from the lowest level since June. The fall in oil prices increased after Baker Hughes Inc. data showed that the total number of U.S oil rigs increased for the first time this year.
“Oil is going to slip when the dollar stops plunging,” said Thomas Finlon, director of Energy Analytics Group LLC in Jupiter, Florida. “We’ve had a dramatic rally to highs for the year and it’s time for things to calm down for a bit. I don’t think this disrupts the overall trend at all, and we should soon resume the move higher.”
Prior to the data, oil prices advanced due to lower U.S. oil production and improved central-bank policies for demand growth even as they pressured the dollar.
West Texas Intermediate oil capped a fifth weekly gain amid speculation that stronger demand and shrinking U.S. shale production will ease a global glut.
The Federal Reserve signaled a slower pace of rate increases, and Norway and Indonesia cut borrowing costs on Thursday, a week after the European Central Bank boosted stimulus. The Fed headlines sent the dollar lower, bolstering the appeal of commodities priced in the currency.