Crude bounces back after record slump
06 May 2011
After slumping to $106 a barrel on Thursday – the biggest weekly decline in a year - oil climbed back in New York.
Futures increased as much as 1.2 per cent after sliding 8.6 per cent on Thursday following worse-than-expected US economic data, including an upturn in unemployment figures. Oil broke through the lower Bollinger Band, a technical signal which typically indicates prices are poised to rise.
Crude for June delivery gained as much as $1.15 to $100.95 a barrel in electronic trading on the New York Mercantile Exchange. On Thursday, it fell $9.44 to $99.80, the lowest since 16 March and the biggest percentage drop since 20 April 2009.
Crude's relative strength index, a measure of how rapidly prices are rising or falling, slipped to 32 on Thursday, the lowest since 24 August. A reading of 30 typically indicates the commodity is set to climb.
The Dollar Index, a measure of the US currency against six major currencies, surged 1.5 per cent on Thursday to 74.12 in the biggest one-day gain since October. A stronger dollar reduces the attractiveness to investors of commodities, which dropped the most since 2009.
In London, Brent crude for June settlement added as much as $1.85, or 1.7 per cent, to $112.65 a barrel, on the London-based ICE Futures Europe exchange. On Thursday, it plunged $10.39, or 8.6 per cent, to $110.80.
The European benchmark traded at a premium of $11.66 a barrel to US futures today. The difference between front-month contracts in London and New York surged to a record $19.54 on 21 February. The spread averaged 76 cents last year.
Oil has gained 10 per cent in New York this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya, Algeria, Bahrain, Iran, Oman, Syria and Yemen. The Obama administration said it will permit Libyan rebels to draw on the $33 billion in Libyan assets frozen by US, as allied nations opposing Muammar Qaddafi looked for further measures to force him from power.
