Oil drops to near $83 as stock market slides and dollar strengthensBy Deborah Jian Lee, AP
Friday, April 16, 2010
Oil settles near $83, stocks slump on Goldman news
NEW YORK — Oil prices settled near $83 a barrel on Friday after the government accused Goldman Sachs of fraud, earnings from some top companies disappointed investors and data on single-family home construction declined.
Benchmark crude for May delivery fell $2.27 to settle at $83.24 a barrel on the New York Mercantile Exchange. Earlier it dipped as low as $82.52.
The Securities and Exchange Commission said Goldman Sachs & Co. defrauded investors by failing to disclose key information about mortgage investments it sold as the housing market was collapsing in 2008.
Earlier, the Commerce Department said housing construction rose to a 16-month high in March. But construction of single-family homes, the most important segment of the market, declined.
The Dow Jones Industrial Average was down about 120 points in afternoon trading as investors sold off shares on the Goldman news. Goldman shares were down about 13 percent. Disappointing earnings reports from General Electric and Bank of America also drove the Dow back toward the 11,000 mark it passed earlier this week.
Crude oil traders often look to stock markets as a barometer of overall investor sentiment. They also consider broader economic conditions in their trades, said PFGBest analyst Phil Flynn, who believes recurring worries about Greece’s debt problems are strengthening the dollar and pushing down crude prices. A stronger dollar makes crude more expensive for investors holding other currencies.
“The more you look at the supply-demand part of equation, the more you realize that the price of oil is based on macro-economic issues like currency-exchange rates and interest rates more than how many barrels we have put away,” said PFGBest analyst Phil Flynn.
Oil prices have stayed in the mid-$80 range since jumping 25 percent in two months, to above $87 last week.
Meanwhile, the national average gasoline pump price edged up less than a penny to $2.862 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 7.3 cents more expensive than a month ago and 81 cents higher than a year ago.
In other Nymex trading in May contracts, heating oil fell 3.54 cents to settle at $2.2169 a gallon, and gasoline dropped 4.92 cents to close at $2.2770 a gallon. Natural gas rose 5.4 cents to settle at $4.039 per 1,000 cubic feet.
In London, Brent crude was down $1.60 to settle at $85.99 on the ICE futures exchange.
Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.
Tags: Commodity Markets, Goldman sachs, New York, North America, Oil-prices, United States