Prices hit
2016 highs Wednesday due in part to production outages resulting from wildfires
around the Canadian oil sands hub of Fort McMurray but pulled back to settle
lower after the dollar climbed. A stronger greenback makes dollar-priced oil
more expensive, denting demand and hurting prices.
Minutes from
the US Federal Reserve’s policy meeting in April that were released Wednesday
showed that policymakers kept open the door to raising interest rates in June.
Higher
interest rates typically encourage investors to move to the dollar for higher
yields, lifting the currency.
At about
1200 GMT, US benchmark West Texas Intermediate (WTI) for June delivery was down
84 cents at $47.35 per barrel. Brent for July dipped $1.08 to $47.85 a barrel.
“The
main factor weighing on prices is the much appreciated US dollar,” said Commerzbank analyst Carsten Fritsch. “What is more, rain forecast in the Canadian oil province of
Alberta is giving rise to hopes that the devastating wildfires there could be brought
under control.”
Before Fed
minutes were released on Wednesday, prices had been on the march toward $50 due
to supply disruptions in Canada and Africa’s biggest oil producer Nigeria, with
better demand also boosting hopes of easing a global crude oversupply.
CMC Markets
senior sales trader, Alex Wijaya,
said the strengthening dollar and a rise in US commercial crude inventories
last week combined to “cause a dip in oil prices”.
The US
stockpiles rose 1.3 million barrels in the week ending May 13, indicating
softer demand in the world’s top oil consumer.
Prices have
rebounded strongly since plunging to near 13-year lows below $30 in February
but are still well below peaks of more than $100 a barrel reached in June 2014.
“In
the near term, the oil market will watch closely economy data from Japan and
the US due to be released next week,” said EY oil
and gas analyst, Sanjeev Gupta. “Outages and supply disruptions in Canada, Nigeria and
Venezuela will also impact the balancing of the oil market,” he said in
a note. (Guardian)
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