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Oil slips as dollar gains, demand shows signs of weakening

Reuters  |  NEW YORK 

By Ayenat Mersie

NEW YORK (Reuters) - prices slipped on Wednesday, as a strengthening dollar overshadowed a U.S. crude inventory report that showed domestic crude stocks falling more than expected.

Brent crude futures were down 31 cents at $77.43 a barrel by 11:17 a.m. EDT (1517 GMT), while U.S. crude futures fell 30 cents to $71.01 a barrel.

The dollar firmed to nearly a five-month high against a basket of other major currencies on Wednesday. A stronger greenback makes it more expensive to buy dollar-denominated commodities like

"The only reason why we're not seeing higher prices from here today is the strength of the U.S. dollar," said Tariq Zahir, managing member at

U.S. crude stocks fell last week as exports hit a new one-week record, while inventories of both gasoline and distillates fell, the said.

Crude inventories fell by 1.4 million barrels in the week to May 11, compared with analysts' expectations for a decrease of 763,000 barrels.

"All in all, the report is bullish. stocks fell across the board and in some cases more than expected, whilst rising exports point to healthy demand for U.S. crude," said.

Physical crude markets are sagging under the weight of unsold barrels of oil, while the 50 percent rise in in the last year is encouraging major companies such as ExxonMobil, Royal Dutch Shell, Chevron, and Total to increase output.

are at their steepest discounts to futures prices in years as sellers struggle to find buyers for West African, Russian and Kazakh cargoes, while pipeline bottlenecks trap supply in and

The International Energy Agency on Wednesday warned global demand is likely to moderate this year, as the price of crude nears $80 a barrel and many key importing nations no longer offer consumers generous fuel subsidies.

In its monthly report, the Paris-based IEA cut its forecast for global demand growth in 2018 to 1.4 million barrels per day, from a previous estimate of 1.5 million bpd.

"On balance, the report is tending more to the negative side. Demand for oil has been revised downwards for the second half of the year from April," said.

(Additional reporting by in LONDON and Henning Gloystein in SINGAPORE; Editing by and Paul Simao)

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

First Published: Wed, May 16 2018. 21:15 IST