Oil falls as spotlight returns to glut, dollar up

LONDON: Crude oil futures fell back towards $45 per barrel yesterday as the dollar gained and investor focus shifted back to a deep global supply glut. Brent was down 94 cents at $45.18 a barrel at 1241 GMT, having touched a low of $45.11.

The benchmark hit its highest since Nov. 11 at $46.50 on Tuesday after Turkey shot down a Russian jet. It had risen for five consecutive days, its longest run of positive sessions since April.

US West Texas Intermediate (WTI) futures fell 78 cents to $42.09 a barrel, having gained $1.12 to $42.87 on Tuesday. Data from industry group the American Petroleum Institute (API) on Tuesday showed that U.S. crude stocks rose by 2.6 million barrels in the week to Nov. 20, more than double analysts’ expectations for an increase of 1.2 million barrels.

“Inventories surprised on the upside and it will draw back attention to the supply that hangs over the market,” said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.

A gain in the dollar, which rose to an eight month high against a basket of currencies, also weighed on prices as oil, priced in the US unit, became less affordable to holders of other currencies.

The API data came ahead of figures from the Energy Information Administration, due at 1530 GMT (1030 EST) and expected to show crude oil stocks rose for a ninth consecutive week.

OPEC is determined to keep pumping oil vigorously despite the resulting financial strain-even on the policy’s chief architect, Saudi Arabia-alarming weaker members who fear that prices may slump further towards $20. President Tayyip Erdogan said yesterday that Turkey did not want any escalation of tension over the downing of the Russian warplane, and that it had acted simply to defend its own security and the “rights of our brothers” in Syria.