Investing.com - U.S. oil futures plunged to a five-month low on Thursday, as the U.S. dollar rallied after strong economic data increased the likelihood that the Federal Reserve would raise interest rates in September.
Crude oil for delivery in September on the New York Mercantile Exchange hit an intraday low of $42.55 a barrel, a level not seen since March 2009, before trading at $42.61 during U.S. morning hours, down 69 cents, or 1.59%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.4% at 96.67, off Wednesday's one-month lows of 95.94.
The U.S. Commerce Department said retail sales increased by 0.6% last month, beating expectations for a gain of 0.5%. Retail sales for June were revised up to a flat reading from a previously reported decline of 0.3%.
Core retail sales, which exclude automobile sales, rose 0.4% in July, matching forecasts. Core sales in June increased 0.4%, whose figure was revised from a previously reported decline of 0.1%.
At the same time, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits rose by 5,000 last week to 274,000 from the previous week’s total of 269,000. Analysts had expected initial jobless claims to rise by 1,000 to 270,000 last week.
First-time jobless claims have held below the 300,000-level for 23 consecutive weeks, which is usually associated with a firming labor market.
The upbeat data bolstered the case for a U.S. rate hike this fall.
Elsewhere, On the ICE Futures Exchange in London, Brent oil for October delivery inched down 43 cents, or 0.86%, to trade at $49.75 a barrel.
Brent prices hit a daily peak of $50.83 earlier as appetite for growth-linked assets improved after the People's Bank of China reassured markets that it will not continuously devalue the yuan.
The central bank said in a closely-watched press conference earlier Thursday that there was no basis for further depreciation in the yuan, given China's strong economic fundamentals.
Brent tumbled to $48.24 on Monday, the weakest level since March 2009, amid concerns over a global supply glut.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $7.14 a barrel, compared to $6.88 by close of trade on Wednesday.