Oil Drops Below $101

CNBC

Oil prices slipped below $101 a barrel Thursday as a weaker dollar failed to fully compensate for mixed signs over U.S. crude demand heading into the summer driving season.

By early afternoon in Europe, benchmark oil for July delivery was down $0.61 to $100.71 a barrel in electronic trading on the New York Mercantile Exchange. The contract added $1.73 to settle at $101.32 on Wednesday.

In London, Brent crude for July delivery was down $0.55 at $114.38 a barrel on the ICE Futures exchange.

The Energy Department said Wednesday that oil and gasoline supplies in the U.S. grew last week while distillate inventories fell. Four-week average oil demand in the U.S. dropped 5.3%, while gasoline demand fell 2.1%, the department said.

"Our biggest concern here is that economic data is poor," Cameron Hanover said in a report. "One look at this week's DOE report tells us that fundamentals in the world's largest oil-consuming market (U.S.) are not great."

The euro rose to $1.4168 on Thursday from $1.4083 late Wednesday while the dollar fell to 81.93 yen from 82.04 yen. A weaker U.S. currency makes dollar-based commodities such as oil cheaper for investors with other currencies and usually boosts prices.

On Thursday, however, concerns about the pace of economic growth around the world seemed to cancel out the bullish exchange rate developments.

"The uncertain global economic conditions continue to cause further nervous conditions to the oil market, following weaker oil demand from China and Japan, mixed U.S. economic data and persistent worries about the eurozone's debt problems," said an energy report from Sucden Financial in London.

Some analysts expect a growing global economy will help boost crude demand. Citigroup said it sees global gross domestic product expanding as much as 4% this year and next, led by developing countries.