prices fell sharply yesterday, after hitting a series of record
highs in previous sessions, as the dollar strengthened and traders
pulled back amid concerns of softening demand.
Light, sweet crude traded down $3.34 to settle at US$128.85 on the
New York Mercantile Exchange. The oil market was closed on Monday
in observance of the Memorial Day holiday.
Crude prices rallied last week ahead of the holiday weekend, which
marks the beginning of the season when Americans typically do their
heaviest driving. On Thursday, oil prices hit a record US$135.09
a barrel, one day after soaring above US$130 for the first time.
Concerns about short supplies and geo-political instability also
helped fuel the rally.
usually see prices bid-up before the holiday, Stephen Schork,
an oil industry analyst and publisher of the Schork Report. Today
were seeing some of the air let out of the balloon.
If the market follows its typical seasonal pattern, Schork thinks
crudes highs have been put in. Though he added
that the market has seen a tremendous amount of support
and the seasonal pattern may not hold this year.
A stronger dollar also helped pressure oil prices yesterday. The
euro bought $1.570, down from $1.5774 on Monday evening while the
British pound fell to $1.977 from $1.982 in New York.
Investors who buy oil futures to hedge against inflation often sell
the commodity when the dollar rises. And a stronger dollar makes
oil less attractive to overseas buyers.
Meanwhile, the current national average price for a gallon of regular
gasoline is $3.937, up slightly from $3.936 on Monday, according
Many analysts are expecting the high price of gas to have crimped
sales over the holiday weekend. But the Department of Energys
report on gas will not be released until next week.