Prices of oil collapses on robust U.S. dollar

Oil drops

Thursday, prices of oil plummeted as the U.S. dollar continues to extend its recovery from last week. The United States West Texas Intermediate crude futures settled at $61.12 per barrel, which was down by 0.9% or 56 cents from their previous settlement, while the international benchmark: Brent crude futures, settled at $64.92 per barrel, which was 0.8% or 50 cents lower from their last close.

As oil trading is conducted basically with the use of the U.S. currency, a rise in the dollar makes fuel imports for countries using different currency expensive, restraining demand, leading to oil prices experiencing a decline.

In addition, Stephen Innes, head of trading for Asia-Pacific at OANDA mentioned that the recovering dollar is preventing investor sentiment despite the assertive crude inventory data.

In addition, the recovering greenback also cancelled out a report from API which indicated a fall in U.S. crude inventories. According to a report showed by the API or the American Petroleum Institute on Wednesday, U.S. crude oil inventories indicated a sudden fall of 907,000 barrels to 420.3 million for the week to February 16, 2018.

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