Oil Price Retreats to $130 as Dollar Rises

Oil dropped below $130 a barrel on Tuesday, after a stronger U.S. dollar helped to pull prices down from peaks hit when rebels attacked Nigerian oil facilities. US Light, Sweet Crude Futures $129.85 was sharply lower. Prices rose on Monday when Royal Dutch Shell said it was forced to cut production in Nigeria after rebels from the southern Niger Delta blew up an oil pipeline. Around one-fifth of Nigeria’s oil output has been cut since 2006 following a series of attacks on pipeline and oil infrastructure. Oil prices have climbed about 40 percent this year to an all-time high of $135.09 last week, driven by an extended slide in the value of the dollar, which has driven buying of dollar-denominated commodities. The dollar strengthened against the yen and the euro on Tuesday after softer economic data in Europe. In the immediate term, there is increasing evidence high oil prices are denting demand and exaggerating economic weakness. “Several airlines have already started to cut back flights and a number of transport companies are under severe stress,” U.S. investment bank Merrill Lynch said in a research note.

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