Oil Falls as Stronger Dollar Eclipses U.S. Inventory Drop

Posted by Joseph Keefe
Thursday, February 22, 2018
Stronger dollar makes oil costlier for some buyers; API report showed lower U.S. crude inventories.
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 were down 11 cents at $65.31 per barrel by 1218 GMT, while West Texas Intermediate (WTI) futures eased 24 cents to $61.44 a 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.
With the strengthening dollar, the oil price has lost nearly 10 percent since hitting a multi-year high above $70 in January.
"Given the market’s whipsaw reaction we could add another key takeaway, that recent heightened market volatility could be here to stay," LCG markets strategist Jasper Lawler said.
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.
"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.
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.
"Improved pipeline infrastructure to the Gulf coast and the decreased supply via TransCanada's Keystone pipeline, sent ... inventories tumbling," Innes said.
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.
"OPEC production curbs have stabilised the market. Adherence to (the) agreement has been relatively good," Daniel Hynes, senior commodity strategist at ANZ bank, said in a report on Thursday.

Reporting by Amanda Cooper 

Categories: Contracts Energy Finance Logistics Middle East Tankers

Related Stories

Aesen, DOC JV Targets Subsea Cable Logistics

Russia Targets 2028 for Sakhalin-3 Gas Project Start Up

Chinese Contractor Secures Offshore Oil and Gas ‘Mega Deal’ from QatarEnergy

DOF Secures Moorings Hook-Up Job in Asia Pacific

Floating Offshore Wind Test Center Planned for Japan

SPE Offshore Europe 2025 set to drive transformational change for the energy sector

Saipem Wins FEED Contract For Abadi LNG Project FPSO Module In Indonesia

Shelf Drilling Lands New Jack-Up Contract in Vietnam, Extends Egypt Deal

Santos and QatarEnergy Agree Mid-Term LNG Supply

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

Current News

MODEC Ramps Up Hammerhead FPSO Work After ExxonMobil's Go-Ahead

Aesen, DOC JV Targets Subsea Cable Logistics

Timor Gap Boosts Stake in Finder Energy’s Timor-Leste Oil Fields

SBM Offshore Starts Construction of FSO for Trion Oil Field off Mexico

Russia Targets 2028 for Sakhalin-3 Gas Project Start Up

Seatrium Secures ABS Backing for Deepwater FPSO Design

MDL Secures Cable Laying Job in Asia Pacific

Hibiscus Petroleum Starts Drilling at Teal West Field off UK

Yinson Production Nets DNV Approval for New FPSO Hull Design

Hanwha Ocean's Tidal Action Drillship Starts Maiden Job with Petrobras

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com