News ID: 210410
Published: 1127 GMT February 22, 2018

Oil falls as stronger dollar eclipses U.S. inventory drop

Oil falls as stronger dollar eclipses U.S. inventory drop

Oil prices fell on Thursday, dragged lower by a firmer dollar that offset support from a surprise decline in U.S. crude inventories.

Brent crude futures LCOc1 were down 28 cents at $65.14 a barrel by 1007 GMT, while West Texas Intermediate (WTI) futures CLc1 dropped 37 cents to $61.31 a barrel Reuters reported.

The dollar rose to a one-week high against a basket of major currencies .DXY on Thursday, after minutes of the Federal Reserve’s January meeting showed policymakers were more confident of the need to keep raising interest rates.

With the strengthening dollar, the oil price has lost nearly 10 percent since hitting a multi-year high above $70 in January.

The correlation between moves in the oil price and the dollar has strengthened in the last couple of weeks, as investors increasingly sell other assets to buy the U.S. currency on expectations of a faster pace of rate rises.

A stronger dollar pushes up the bill for countries paying for imports in other currencies, potentially curbing demand.

The American Petroleum Institute on Wednesday reported an unexpected drop in U.S. crude oil inventories by 907,000 barrels to 420.3 million barrels for the week to Feb. 16.

Inventories usually rise at this time of year, as many refineries cut crude intake to conduct maintenance, but a bottleneck in Canada’s pipeline system has reduced U.S. imports and pushed U.S. stocks lower.

But analysts said oil markets were still generally well supported due to rising demand for crude and production restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.

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