Oil slips as US inventories rise and dollar strengthens
Oil prices slipped back from eight-week highs yesterday on expectations of a rise in US crude inventories and a slightly stronger dollar.
US crude inventories probably rose for a sixth straight week as imports edged up and refinery utilisation remained flat, a Reuters survey showed.
Crude oil futures fell $1 per barrel on both sides of the Atlantic, with benchmark US futures for April dropping to a low of $80.86, down $1.01, before recovering slightly to trade around $80.90 by 0951GMT.
North Sea Brent crude oil futures slipped to a low of $79.33, down $1.14, before paring some losses to stand at $79.45.
"Forecasts of a yet another build in US crude stocks show the disconnect between the fundamentals of oil supply and demand, which are quite bearish, and hopes of economic recovery, which are bullish," said Commerzbank analyst Carsten Fritsch.
"But the market doesn't seem to want to hear negative news for long and tends to react more strongly on the upside. It is two steps upwards, one step down at the moment."
The Organisation of the Petroleum Exporting Countries (Opec) will keep oil production targets on hold when it meets in Vienna on March 17, but could raise output later this year as the world recovers from recession, pushing up demand for fuel, a Reuters poll showed on Monday.
Opec ministers say they are happy with oil prices as they are and they are unlikely to do anything that would alter the current trading range between $70 and $85 per barrel.
The US Energy Information Administration is expected to hold its global oil demand growth forecast steady for this year at 1.2 million barrels in its latest report, although some analysts believe the EIA might be too optimistic given stubbornly high oil prices and an uncertain economy.
The EIA's monthly short-term supply and demand forecast was published yesterday at 1500GMT.
The crude inventories in the United States gained 1.9 million barrels in the week to March 5, the Reuters poll showed, while gasoline stockpiles may have increased by 300,000 barrels.
Distillates, a fuel category that includes heating oil and diesel, were expected to have dropped 900,000 barrels because of lingering winter weather conditions in the US Northeast, the biggest heating market.
The US dollar, which for months has been inversely correlated with crude oil prices, edged up yesterday against a basket of currencies, putting some pressure on oil prices.
But some traders said the currency has recently influenced crude prices less, especially at times when economic data releases enter the spotlight.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.
Follow Emirates 24|7 on Google News.