Crude oil prices accelerated their decline on Monday, joining a wider commodity selloff and falling more than $4.46 to $101.16 a barrel on the New York Mercantile Exchange, adding to a drop of nearly $2 a barrel on Friday.
New York oil futures reached a record US$111.80 on March 17 as the slumping U.S. dollar and falling equity prices encouraged investors to seek better returns in commodities.
Prices dropped as low as US$99.13 last week before rebounding amid renewed fighting in southern Iraq. Meanwhile, natural gas prices rose in today’s trading session as lingering cool temperatures kept demand strong.
U.S. fuel demand has dropped for seven out of the past eight weeks now while a government report on April 2 – according to Bloomberg – may show that U.S. crude-oil inventories last week rose for the 11th time in 12 weeks.
Speculators have poured money into commodities in recent weeks as a hedge against inflation and a weakening dollar, which neared its all-time low against the euro Monday.
Analysts are split on oil’s direction (nothing new there). Many think prices will rise to new records in coming months as the dollar weakens further, but others say such high prices can’t be sustained.
