Posted on Wed, Apr. 2, 2008
NEW YORK - Oil futures slid further yesterday as the dollar gained ground, making commodities such as energy futures less attractive to investors seeking a hedge against inflation.
Retail gasoline prices slipped slightly from the record they set one day earlier.
Investors who previously bought commodities such as oil as a haven against inflation and a falling dollar sold yesterday as the greenback strengthened against the euro and other currencies. The stronger dollar also made oil more expensive to overseas investors.
Light, sweet crude for May delivery fell 60 cents to settle at $100.98 a barrel on the New York Mercantile Exchange after earlier falling as low as $99.55. Oil futures fell $4.04 a barrel Monday.
But oil prices surged as high as $102.55 yesterday as the early dip below the psychologically important $100 level drew buyers betting that high demand will give crude prices room to rise. Many large funds that invest in commodities such as oil craft strategies for their traders to buy automatically when prices fall to what they consider key support levels.
Many analysts say they believe dollar-induced buying has driven oil prices far beyond levels that can be justified by supply and demand or economic conditions. The second quarter of the year, which began yesterday, typically has the lowest petroleum demand. The country's appetite for oil and gasoline has fallen sharply since January, and oil supplies have mostly risen in recent weeks.
But other investors see continued strong demand for oil and fuel from China and India as a sign that oil prices have further to rise.
At the pump, the national average price of a gallon of gasoline slipped 0.1 cent yesterday to $3.286 a gallon, according to AAA and the Oil Price Information Service. While that is a slight retreat from Monday's record, gasoline prices remain 60 cents higher than a year ago and are expected to rise as high as $3.50 or $4 a gallon this spring.
