Oil prices drop as dollar firms

25th November 2011, Comments 0 comments

Oil prices retreated on Friday as the dollar firmed on new eurozone debt tensions, traders said.

New York's main contract, light sweet crude for delivery in January fell 29 cents to $95.88 a barrel.

Brent North Sea crude for January slid 75 cents to $107.03.

The euro dropped to a seven-week low against the dollar, hitting demand for oil as a stronger US currency makes dollar-denominated crude more expensive for buyers using other, weaker currencies.

Stock markets also fell as investor confidence evaporated over a solution to the eurozone debt crisis, dealers said.

The euro plunged to $1.3226, its lowest point since October 4 as Thursday's meeting between France, Germany and Italy -- the eurozone's three biggest economies -- highlighted their differences on finding a solution to the region's debt problems.

Germany and France promised to reform EU governing treaties on Thursday but Chancellor Angela Merkel stood by her refusal to back eurobonds or widen the European Central Bank's role.

After the crisis talks, French President Nicolas Sarkozy, Merkel and Italy's new Prime Minister Mario Monti said they would move to reform EU governing treaties but said they all agreed there would be no wider ECB role.

Oil prices have fallen for most of the week as traders also worry about slumping manufacturing activity in top global energy consumer China.

China's manufacturing activity fell to its lowest level in 32 months in November, according to data this week from banking giant HSBC, renewing concerns that the Asian powerhouse is losing steam amid global economic woes.

The market has also been dented by weak economic growth data in the United States -- the world's biggest consumer of crude oil.

The US Commerce Department on Tuesday sharply lowered its third quarter growth estimate for the world's biggest economy to 2.0 percent from the 2.5 percent first stated.

Oil prices had risen at the start of the week on worries that the market could tighten after several Western countries imposed economic sanctions on crude producer Iran over its nuclear programme.


© 2011 AFP

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