WTI oil price nears $89, ICE Dollar Index lacks direction

WTI oil prices open today’s trading session edging towards $89 a barrel as the US dollar seems to lack any clear direction, as seen by small movements on the ICE Dollar Index.

Latest WTI Oil Price

US Light crude oil futures for January 2011 delivery was trading at $88.55 a barrel, 06.50 GMT this morning on the NYMEX.

Meanwhile, the ICE Dollar Index, which tracks the US dollar against a trade weighted basket of six major currencies, was up slightly to 79.354 from 79.335.

Strong Resistance

Some analysts believe that WTI oil prices will encounter stronger resistance after it approaches $90 per barrel.

“Traders might have seen $90 as a little high.” said Mike Zarembski, senior commodities analyst at OptionsXpress.

A Weaker Dollar Ahead?

“It’s a market consensus that the Fed will maintain current policy. This means a weak dollar and rises in commodities. Still, a sharp rise in crude oil prices is unlikely due to high stockpiles in the US.” said Hiroyuki Kikukawa, analyst with Tokyo based broker Nihon Unicom.

The US dollar fell in currency trading yesterday against many currencies following declines in yields on US Treasury notes and in light of renewed risk on sentiment.

“While there are emerging signs that the recent spike in yields on US Treasury notes may come to a halt, people want to check the rate decision and the accompanying statement first before making fresh bets.” said Yousuke Hosokawa, a senior currency dealer in Tokyo at Chuo Mitsui Trust & Banking Co.