Oil prices dropped Friday as dollar climbed against the euro on speculation that the European Central Bank will cut interest rate. A stronger greenback made the dollar-priced crude more expensive and less attractive for buyers holding other currencies.
The dollar continued to rise versus the euro on Friday as euro- zone inflation fell more than forecast and boosted expectations that the European Central Bank would further ease monetary policy.
The dollar rallied further after a report showed that U.S. manufacturing grew in October at a faster pace than forecast.
The U.S. manufacturing sector expanded in October for the fifth consecutive month, and the growth picked up pace from the previous month, the U.S. Institute for Supply Management reported. The manufacturing index for October edged up to 56.4 from 56.2 in September.
Oil prices are under a lot of pressure because of oil supplies are growing and this trend is believed to continue.
U.S. crude supplies increased by 4.1 million barrels to 383.9 million barrels for the week ended Oct. 25 due to the strong increase in shale oil production.
The crude output of Organization of Petroleum Exporting Countries (OPEC) rose in October according to a survey of Bloomberg. The completion of maintenance work in Iraq boosted OPEC 's daily production to an average of 30.621 million barrels a day.
Light, sweet crude for December delivery decreased 1.77 dollars to settle at 94.61 dollars a barrel on the New York Mercantile Exchange, while Brent crude for December delivery lost 2.93 dollars to close at 105.91 dollars a barrel.