Crude declines to two-week low as Dollar rises on Federal Reserve

NEW YORK: West Texas Intermediate crude fell to a two-week low as the dollar rose on expectations the Federal Reserve will trim its monthly bond purchases in September and on concern that China's cash squeeze may curb its economic growth.

Prices capped the first weekly loss in three as the Dollar Index reached a two-week high. About 44% of economists in a Bloomberg survey June 19-20 saw the Fed tapering stimulus, compared with 27% June 4-5. China's one-day repurchase rate touched a record on Friday, prompting speculation the central bank was forced to pump liquidity.

"The dollar strength is definitely weighing on prices," said John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy. "Crude oil is coming down because the Fed is reducing its support. There is a lot of concern over the situation in China and this potential disruption within China's banking system."

WTI for August delivery dropped $1.45, or 1.5%, to $93.69 a barrel on the New York Mercantile Exchange, the lowest settlement since June 4. The volume of all futures traded was 19% above the 100-day average for the time of day at 2:55 p.m. The July contract expired on Friday after falling $2.84 to $95.40, the biggest loss since November 7. Front-month futures have decreased 4.3% this week.

Brent for August settlement fell $1.24, or 1.2%, to end the session at $100.91 a barrel on the London-based ICE Futures Europe exchange.