LONDON, Feb 12 – World oil prices plunged on Friday as traders took their cue from the strengthening US dollar and eyed a crucial update on energy stockpiles in the United States, analysts said.
New York\’s main futures contract, light sweet crude for delivery in March, fell 1.64 dollars to 73.64 dollars a barrel.
Brent North Sea crude for March delivery plunged 1.48 dollars to 72.64 dollars a barrel.
Oil sank after the European single currency fell close to a nine-month dollar low, as markets took a dim view of eurozone growth data and unclear EU proposals to help debt-ridden Greece.
In late morning London trade, the euro tumbled to 1.3532 dollars, the lowest level since May 19. That compared with 1.3695 in New York late on Thursday.
A stronger dollar usually dampens demand for oil because it makes dollar-priced crude more expensive for buyers using weaker currencies.
"While European key players and the IMF will not allow a complete failure of Greece, the euro is likely to remain under pressure from the issue and similar concerns for other countries in the region," said analysts at the JBC Energy consultancy in Vienna.
EU leaders stopped short Thursday of offering a bailout to rescue eurozone member Greece. Deep problems in Greek public finances have highlighted the parlous debt of other crisis-hit countries such as Italy and Spain.
Investors also sought the safe-haven dollar after China ordered financial institutions to increase the amount of money they keep in reserve, as Beijing looked to rein in rampant lending amid fears of asset bubbles.
The development was an additional concern for the oil market because China is the world\’s second biggest energy consuming nation after the United States.
Later Friday, traders will digest a key US inventories report for the week ending February 5. The report, usually published on Wednesdays, was delayed due to a snowstorm in the northeastern US.
This week, crude futures have edged higher as investors mulled the prospect of EU financial support for crisis-hit Greece — and as the US east coast experienced its second huge snowstorm in less than a week.
The International Energy Agency forecast on Thursday that world oil demand and prices would rise this year, driven higher by strong growth in emerging economies, revising upward its earlier forecasts.
The Paris-based agency said demand was now expected to be 86.5 million barrels per day in 2010 compared to a forecast last month of 86.3, while average prices will rise to 75 dollars per barrel from 58 in 2009.
Global daily demand is now estimated at 84.9 million barrels per day (mbd) in 2009, and thus the IEA is predicting a 1.6-mbd increase.
Demand growth is expected to come "entirely" from outside the Organisation for Economic Cooperation and Development (OECD), a grouping of 30 developed economies including Britain, France, Germany, Japan and the United States.