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Oil falls on strong dollar, signs of build at U.S. hub

Reuters  |  NEW YORK 

By Ayenat Mersie

NEW YORK (Reuters) - prices fell on Thursday, headed for a second straight weekly drop on a stronger dollar, signs of an inventory build at the U.S. storage hub in Cushing, Oklahoma, surging U.S. crude production and investor jitters about a potential trade war.

futures fell 73 cents, or 1.1 percent, to settle at $63.61 per U.S. Intermediate (WTI) crude futures fell $1.03, or 1.7 percent, to settle at $60.12 per

Brent was on track for a drop of around 0.8 percent this week, after last week's 4.4 percent slide. WTI was on track for a 1.5 percent decline after a 3.6 percent slide last week.

"It looks to me that crude has peaked and it's heading lower," said Walter Zimmerman, at United- "I see it heading back to test the early February lows, $57 for WTI and $62 for Brent. And I'm not at all confident that those levels are going to hold," he said.

The dollar rose about 0.6 percent against a basket of currencies <.DXY>. A stronger greenback makes it more expensive to buy dollar-denominated commodities like

Also pressuring crude prices, data from market intelligence firm showed inventories at the Cushing, storage hub rose by more than 290,000 barrels in the week to March 6, said traders who saw the data.

This increase, if confirmed by official data, would be the first build in 12 weeks at Cushing, where stockpiles have more than halved since November.

Data from the (EIA) on Wednesday showed U.S. crude production hit a record of almost 10.4 million barrels per day (bpd) in the week ended March 2.

The EIA production data is "finally taking some of the wind out of the sails of the bullish speculators," said Rob Haworth, with

Worries that might start a trade war also put markets on edge.

"Until the U.S. tariff issue is better defined, we feel that odds favor a renewed sharp downturn in the stock market that will easily spill into the space," Jim Ritterbusch, of firm said in a note.

U.S. crude output is expected to surge beyond 11 million bpd by late 2018, limiting the effectiveness of output cuts by the Organization of the Exporting Countries, and other producers.

Adding to concerns is China's reported drop in crude imports for February.

re-issued its 2018 global demand growth forecast of 1.85 million bpd, despite recent signs of a slight slowdown, citing a strong start to the year and a pattern of second-quarter demand acceleration.

(Additional reporting by in New York, Amanda Cooper in LONDON, Henning Gloystein and Roslan Khasawneh in SINGAPORE; Editing by and David Gregorio)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, March 09 2018. 06:56 IST