Brent oil price trading over $92 amid strong US dollar

16 December 2010 16 December 2010

BonTrade

Brent oil prices open Thursday’s trading session back over $92 a barrel, although the US dollar surged higher on currency markets yesterday after news that Spain may see a further credit rating downgrade.

Latest Brent Oil Price

In London, Brent crude oil futures for January 2011 delivery was trading at $92.15, 07.00 GMT this morning on the ICE Futures Exchange. The January 2011 Brent oil futures contract expires today.

Meanwhile, the ICE Dollar Index, which tracks the US dollar against the six major world currencies was at 80.218 after rising over one percent yesterday, the biggest jump in more than three weeks.

Spain Credit Rating Downgrade Talk Hurts Euro

The US dollar rose against the euro after Moody’s put Spain’s credit rating on review, citing the high refinancing needs that the debt laden country will face in 2011. Moody’s said Wednesday that it may downgrade its ratings on Spanish government debt, citing Spain’s challenging refinancing needs for 2011.

It seems that market confidence has changed since September, when Moody’s downgraded Spain’s credit rating by one notch to Aa1.

A stronger US dollar makes dollar denominated crude oil futures more expensive for buyers in other currencies. Strength in the greenback can also push investment into foreign exchange markets and out of commoditiy markets, weighing on oil prices.