NEW YORK (
) - A stronger dollar wrested earlier gains from crude oil futures on Friday as the January contract settled below the psychologically significant level of $70 a barrel.
Crude futures climbed in early morning action after the
International Energy Agency said that the world's demand for oil in 2010 would increase slightly more than previous forecasts. Strong industrial production and import data from China also boosted oil prices in the morning.
Crude surrendered gains, however, as the dollar rose to its highest level in two months on improving economic data released Friday morning. The emergence of a stronger consumer sector suggested a recovering economy and tirggered thoughts that rate hikes would come sooner than expected.
The January crude contract lost as much as 1.5% during Friday's session before settling down by 67 cents, losing nearly 1%, at $69.87 a barrel. The dollar index was last up by 0.7%.
"Price upside to oil depends on further improvements in the flow of oil demand data, especially demand for distillates, of which the bulk of the global refined product inventory overhang consists," said Barclays Capital analysts Natalya Naqvi and Kevin Norrish in a recent note. "There are already signs that this process is underway with non-OECD Asian distillates demand turning strongly positive in September, and we expect manufacturing inventory to provide a strong boost to diesel demand in Europe and the U.S. in the first quarter of 2010."
On Friday, the Commerce Department reported that
retail sales edged higher by a stronger-than-expected 1.3% in November and the
Reuters/University of Michigan consumer confidence index surged past expectations in December.
Business inventory data also added to the positive data mix, as total inventories tracked higher for the first time in 13 months.
Oil-related stocks were broadly lower on the day, as the NYSE Arca Oil Index declined by 0.7%. Oil servicers, which had helped lead the markets higher on Thursday, were fell by 0.2%. Still, major integrated names
closed the week in positive territory.
finished Friday's session up by 0.5% after saying it sold a 20% stake in an Angolan offshore oilfield. The Angola state-owned oil company exercised a right of first refusal in paying $1.3 billion, quashing a proposed divestiture to
U.S. Oil Fund
closed Friday down by 24 cents, or 0.7%, at $35.49.
In other headlines,
Royal Dutch Shell
won the right to develop the Majnoon oil field in Iraq, believed to be one of the world's largest at 12.6 billion barrels. The smaller Halfaya field was won by a consortium led by
China National Petroleum Corp.
The January delivery contract for natural gas settled the week down by 13 cents, or 2.5%, to $5.16 per million British thermal units after surging Thursday on
declining supply data. January heating oil added a penny to settle 0.3% higher on Friday at $1.91 a gallon, as the January reformulated gasoline contract also gained a penny, or 0.4%, to finish at $1.84 a gallon.
--Written by Sung Moss and Melinda Peer in New York