By Nicole Friedman
NEW YORK--Oil prices slid Friday as the dollar strengthened and
the closely watched U.S. oil-rig data showed another slight
decline.
Light, sweet crude for July delivery recently fell $1.07, or
1.7%, to $59.65 a barrel on the New York Mercantile Exchange.
Brent, the global benchmark, fell $1.17, or 1.8%, to $65.37 a
barrel on ICE Futures Europe.
Moves in the oil price have closely tracked the dollar in recent
weeks, with some analysts attributing nearly all of a recent rally
in oil prices to a weakening in the dollar. The global crude market
remains oversupplied, and some analysts warn that the rally was
unsustainable and oil prices are likely to slump from current
levels later this year.
The dollar rose Friday after the Labor Department said that U.S.
consumer prices rose for the third straight month in April. The WSJ
Dollar Index, which tracks the greenback against other major
currencies, recently rose 0.6%.
A strong dollar makes oil, which is priced in dollars, more
expensive to foreign buyers.
"We continue to emphasize the importance of daily U.S. dollar
swings as a significant driver of oil pricing," said
energy-advisory firm Ritterbusch Associates in a note.
Analysts also anticipate strong U.S. driving demand during the
Memorial Day weekend holiday, the unofficial start to the
summer-driving season. U.S. driving has picked up in recent months
due to cheaper gasoline and a strengthening economy.
Retail prices at the pump are at the lowest level for this time
of year since 2009.
In addition, the release of the latest U.S. oil drilling rig
count--a proxy for activity in the industry--showed a drop of just
one rig over the past week, the smallest of the 24-week steak of
declines.
There are now about 59% fewer rigs working since a peak of 1,609
in October. The rate of decline, however, has slowed in recent
weeks and some shale oil companies are expecting to add rigs in the
coming months if prices stabilize near the current levels.
"The current price levels may keep some players in business and
even entice others to come back," analysts at JBC Energy said in a
report. "The first plays to rise from the dead and post further
growth could be in the U.S. and. such a turn of events could keep
production up."
Gasoline futures recently fell 2.3% to $2.0354 a gallon. Diesel
futures fell 1.9% to $1.9485 a gallon.
Georgi Kantchev
contributed to this article
Write to Nicole Friedman at nicole.friedman@wsj.com
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