Reply #3: Oil prices drop to $112 a barrel on stronger dollar

[ozymandius]

SINGAPORE - Oil prices retreated further Friday from the early-week record near $120 a barrel as a strengthening U.S. dollar prompted investors to exit the market.

As the greenback has recovered this week against the euro and yen, the front-month crude futures contract on the New York Mercantile Exchange has dropped nearly $8 from its high to benchmark oil's lowest level since April 14.

The rise of the dollar has stripped away some of oil's appeal to investors who have been betting that the greenback would continue to falter. When the dollar gains ground, commodities such as oil lose their value as a hedge against inflation, prompting selling. Also, a stronger dollar makes oil more expensive to investors overseas.

Light, sweet crude for June delivery fell 49 cents to $112.03 a barrel in electronic trading on the Nymex by midafternoon in Singapore. The contract fell 94 cents to settle at $112.52 a barrel on Thursday.

http://news.yahoo.com/s/ap/oil_prices