Oil settles at US$77 as U.S. dollar gains
NEW YORK — Oil prices fell to below US$78 a barrel Friday on a stronger U.S. dollar and worries that a drop in consumer spending might make the U.S. economic recovery unsustainable.
Benchmark crude for December delivery fell $2.87 to settle at $77 a barrel on the New York Mercantile Exchange. The contract rose $2.41 to settle at $79.87 on Thursday and has traded near $80 a barrel all week.
Oil has been moving higher recently on signs that the U.S. economy is improving and on a weaker U.S. dollar. The Commerce Department said Thursday that the U.S. economy grew at a 3.5 per cent annual pace in the third quarter, the best showing in two years and breaking four straight quarters of declines.
Since oil is largely bought and sold in U.S. dollars, investors holding stronger currencies can buy more crude for less.
But the U.S. dollar rose on Friday, and crude fell sharply, mostly on a dour consumer spending report.
The Commerce Department said U.S. consumer spending plunged in September by the largest amount in nine months. And evidence that U.S. consumers are still holding off on spending drove stocks sharply lower, tempering enthusiasm from the day before over the economy’s growth in the third quarter.