Oil prices fall on firmer US dollar
SINGAPORE: Oil prices fell on Thursday, pulled down as a firmer dollar outweighed a report of a decrease in US crude inventories.
US West Texas Intermediate (WTI) crude futures CLc1 were at $61.15 a barrel at 0748 GMT, down 53 cents, or 0.9 per cent, from their last settlement. Brent crude futures LCOc1 fell 48 cents, or 0.7 per cent, from their last close to $64.94 per barrel.
The dollar rose to a one-week high against a basket of major currencies on Thursday, after minutes of the Federal Reserve’s January meeting showed policymakers were more confident of the need to keep raising interest rates.
“The firming dollar continues to thwart investor sentiment despite the bullish inventory data,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA.
Since oil trading is conducted in dollars, a rise in the greenback makes fuel imports for countries using other currencies domestically more expensive, potentially curbing demand. The firm dollar outweighed a reported fall in US crude inventories. The American Petroleum Institute on Wednesday reported an unexpected drop in US crude oil inventories by 907,000 barrels to 420.3 million barrels for the week to February 16.
“Improved pipeline infrastructure to the Gulf coast and the decreased supply via TransCanada’s Keystone pipeline, sent... inventories tumbling,” Innes said. Despite Thursday’s falls, analysts said oil markets were generally well supported due to demand-growth coinciding with production restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.