Crude Oil Declines, Trades Below $75 a Barrel, as Dollar Gains

By Rachel Graham

Dec. 7 (Bloomberg) -- Crude oil dropped for a fourth day, trading below $75 a barrel as the dollar gained amid speculation the U.S. Federal Reserve may start raising interest rates.

Oil closed at its lowest since Oct. 14 last week after a better-than-forecast U.S. jobless report bolstered the dollar. Commodities including gold and crude oil typically weaken when the dollar gains in value. Saudi Arabian Oil Minister Ali al- Naimi said the price near $75 a barrel is “perfect.”

“A stronger dollar is automatically bad for commodities and can put oil under pressure,” Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich, said by phone from Vienna. “There are fears that interest rates might go up, this is helping the dollar.”

Crude oil for January delivery fell as much as 91 cents, or 1.2 percent, to $74.56 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $74.77 a barrel at 9:11 a.m. London time. Futures have gained 68 percent this year.

The dollar strengthened to $1.4778 per euro as of 8:56 a.m. in London, the strongest level since Nov. 4, from $1.4858 in New York last week.

Crude oil prices are in “the right range” and there is no need to reduce inventories, Saudi Arabian Oil Minister Ali al- Naimi said on Dec. 5.

“Inventories are coming down, the price is perfect, and all investors, consumers, producers -- they’re all very happy,” al-Naimi said in Cairo, where Arab oil ministers were holding an annual meeting.

Saudi Arabia is the largest producer in the Organization of Petroleum Exporting Countries.

To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net