Stronger dollar pulls oil prices down sharply after 4 days of gains

06-May-10

Crude oil for June delivery plunged by US$3.45 to US$82.74 a barrel, breaking a four-day rally. Prices dropped sharply as a stronger dollar, propped by renewed concerns over European sovereign debt and signals of lower demand that reduced the appeal of buying crude. Interestingly, gasoline prices continued to rise. Earlier in the week, crude oil prices marched higher amid optimism about Greece's $146 billion bailout and the possibility that the Gulf of Mexico spill could halt supply. But prices dropped as pessimism over Europe's debt crisis resurfaced on fears that Greece's bailout would not gain the full support of other European nations and the contagion will resurface. Hence the dollar rose to 12-month highs against the euro.