Oil fell as the dollar rebounded on strong jobs data, reducing the appeal of investments in commodities.
Futures dropped 0.3 percent in New York after rising 6.1 percent the previous two sessions. The dollar climbed as much as 0.7 percent after US employers added more jobs than forecast. Declines eased after Baker Hughes Inc. data showed drillers in the US boosted the number of rigs seeking oil for a sixth week, the longest run of gains since last August.
Oil is fluctuating after tumbling more than 20 percent into a bear market and closing below $40 a barrel on Tuesday for the first time in almost four months. Citigroup Inc. and Bank of America Merrill Lynch predicted the slump would be short-lived, while Societe Generale SA said the price correction would be limited due to a better balance between supply and demand.
“Based on inventory levels, we are still kind of expensive on crude,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $4.9 billion. “If the dollar starts to strengthen, that could get us closer to $35 than $40.”
West Texas Intermediate for September delivery fell 13 cents to settle at $41.80 a barrel on the New York Mercantile Exchange. Futures dropped to $39.51 Tuesday, the lowest close since April 7. Prices are up 0.5 percent this week.
Brent for October settlement dropped 2 cents to $44.27 a barrel on the London-based ICE Futures Europe exchange. The global benchmark closed at a $1.70 premium to WTI for October delivery.
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Rigs targeting crude in the US rose by 7 to 381 this week, the highest level since March, Baker Hughes said on its website Friday. America’s oil producers started pulling back on drilling in October 2014, idling more than 1,000 oil rigs since the start of last year
US gasoline stockpiles slid by 3.26 million barrels to 238.2 million, according to the Energy Information Administration. Nationwide crude inventories rose to 522.5 million barrels, keeping supplies more than 100 million barrels above the five-year average.