Oil prices dip on stronger dollar

AFP - Crude prices dipped further in Asia yesterday on a stronger dollar, dampening a rally that saw the commodity hit 11-month highs earlier in the week. The losses were in line with a sell-off on equities markets from Asia to the Americas fuelled by worries about the state of the global economy.

The greenback was boosted by better than expected US unemployment numbers, making oil more expensive and dampening demand.

Traders, however, expect a fresh boost for oil futures if there are new signs of tightening supplies.

“If the positive developments we are seeing like the tightening supply (and) increasing demand in the oil sector continue to develop for the next couple of months, then maybe the strengthening US dollar might not have that great an impact,” said IG Markets’ analyst Bernard Aw.

At around 0825 GMT, US benchmark West Texas Intermediate was 57 cents, or 1.13 percent, down at $49.99 while Brent North Sea crude was 56 cents, or 1.08 percent, lower at $51.39.

Prices have almost doubled since hitting near 13-year lows at the start of the year as US supplies slowly shrink, while production in Nigeria is hit by rebel unrest and Canada’s key oil region is ravaged by wildfires.

On Wednesday the Department of Energy said US commercial stocks fell much more than expected in the week to June 3, fanning talk that demand is improving in the world’s biggest oil consumer.
“As long as prices stay above $50, the uptrend should still be intact,” Aw added.