Oil Drifts Lower On Stronger Dollar

Oil Drifts Lower On Stronger DollarOil dipped Tuesday as a stronger US dollar and progress in controlling wildfires in Canada’s crude-producing Alberta province dampened prices.

At around 1100 GMT, US benchmark West Texas Intermediate for July delivery was down 20 cents at $47.88.

Brent North Sea oil, the European benchmark, for July delivery slid 29 cents at $48.06.

“Crude prices continue to roll over as supply outages in Canada and Libya begin to ease, leaving little fundamental support for oil, save an ongoing strike by French oil workers,” noted Accendo Markets analysts in a note to clients.

In addition, hawkish remarks by US Federal Reserve officials hinting at a June interest rate hike pushed up the greenback against major currencies, pushing oil lower.

“A stronger US dollar continued to extend pressure on commodity prices,” added CMC Markets analyst Margaret Yang.

A stronger greenback weighs down oil prices, as it curtails demand by making the dollar-priced commodity more expensive.

Prices have rebounded since plunging to near 13-year lows below $30 in February but are still well short of peaks of more than $100 a barrel reached in June 2014.

There are market concerns that a supply glut may return following news of Canada lifting evacuation orders for several oil production sites in fire-ravaged Alberta province amid cooler weather and light rain.

Prices were also weakened this week by comments from Iranian officials who vowed to keep up oil production after the lifting of Western sanctions in January.

“$50 appears to be the resistance level because there seems to be not enough of a will to boost it any higher,” IG market strategist Bernard Aw told AFP.

All eyes are now on the OPEC meeting in Vienna on June 2 where it is hoped an agreement to cut production can be reached, Aw said.

The market is also keeping an eye out for inventory data from the American Petroleum Institute, which was due on Tuesday, followed by US Energy Information Administration figures on Wednesday.

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