Oil Prices Fall as Dollar Strengthens

As of 8:56 am EDT, the price of crude had dropped by 0.8 percent to reach $85.17 a barrel and the price of heating oil had fallen by 0.6 percent.

HEAT USA Price Report

Today’s average retail heating oil price per gallon: Down $0.03
Morning projection (for Friday’s average price per gallon): Down $0.02

A strong dollar combined with the lingering effects of supply increases in crude oil and distillates (which include heating oil and diesel) to drive down oil prices. Wednesday’s inventory report from the EIA showed a larger-than-expected buildup of crude oil supplies, and a surprising increase in distillates, which analysts had expected to decline. As inventory data highlighted weak fundamentals, oil traders took more notice of other factors that affect the price of oil, namely the value of the dollar. Concerns about Greece’s fiscal situation continue to recur, boosting the value of the dollar every time they do. A strong dollar makes crude oil and heating oil futures more expensive for traders who hold other currencies, lowering demand and prices.

HEAT USA price experts report that many traders continue to expect fuel demand to rise in the US this summer, but in the short-term fundamentals remain weak and a strong dollar would continue to pressure oil prices to fall.