By Cassie Werber
LONDON--Brent crude oil fell to its lowest point in over two
weeks Thursday, as the strength of the U.S. dollar weighed on
prices and sanctions on Russia made some investors wary of entering
the market.
ICE September crude was down 0.68% at $105.79 a barrel. It last
fell this low on July 15, which followed a slide downward from
highs associated with a violent insurgency in Iraq.
WTI crude on the Nymex exchange was down 0.88% at $99.39 a
barrel, also the lowest since July 15.
A relatively strong dollar may be behind some of the recent
weakness seen in crude prices, JBC Energy, an energy-information
provider, wrote in a note to clients. A strong dollar weakens
buying appetite because crude is priced in dollars, and becomes
more expensive to the rest of the world when the U.S. currency
strengthens.
The U.S. Dollar Index has moved higher by about 2% since July
10, JBC said, while "further gains could be seen as recent U.S.
economic data showed a strong rebound in GDP growth, thereby
implicitly increasing the chances for timelier monetary tightening
and consequently higher interest rates."
The move lower came despite rising tension between western
economies and Russia, JBC said.
Markets may be in wait-and-see mode, said Thina Saltvedt, senior
oil market analyst at Nordea Bank, adding that many in the market
are trying to work out why prices are down, rather than reflecting
any risk associated with Russia by rising.
"Investors are a bit skeptical of all kinds of risky assets
because they don't know how Russia will react to the sanctions,"
she said.
The risk of Argentina defaulting on its debts may also be adding
some hesitation to general market sentiment.
"Investors are waiting to see who will save Argentina, who will
restructure their debt so that they can get back on their feet,"
said Ms. Saltvedt.
Recently the ICE's gas oil contract for August delivery was down
$9.50 at $883.75 a metric ton, while Nymex gasoline for September
delivery was down 275 points at $2.7883 a gallon.
Write to Cassie Werber at
cassie.werber@wsj.com<mailto:cassie.werber@wsj.com>