Oil Prices Slides as Dollar Rises

OPEC's widened tent would still be built on desert sand

The opposing price direction of the two main crude benchmarks had reduced WTI's discount to Brent, to around $3.30 per barrel on Tuesday, down from over $7 in late 2017.

USA crude oil production for week ending February 9 was up this week, coming in at 10.271million bpd, yet another new high.

Since the dollar began to grind higher a few weeks ago, the oil price has lost almost 10 per cent since hitting a multi-year high above $70 in January.

Futures advanced 1.8 percent in NY after a government report showed USA crude stockpiles slid 1.62 million barrels last week, the largest draw in five weeks. The dollar is being supported by the minutes of the Federal Reserve's January monetary policy meeting which showed policymakers are confident in the need to keep raising interest rates throughout the year.

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 USA currency on expectations of a faster pace of rate rises.

Market watchers, however, are expecting a more bearish set of numbers form the more definitive US EIA stocks data due later Thursday.

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West Texas Intermediate, the USA benchmark, was down 0.91 percent to $61.23 per barrel.

Prices are being pulled in two directions, with recent comments from the Organization of the Petroleum Exporting Countries showing commitment to ongoing production cuts giving support, while rising forecasts for US shale output provide pressure, said Harry Tchilinguirian, global head of commodity market strategy at BNP Paribas.

Opec has "taken a lot of production off the table, but it's just being replaced by US production to a large degree", said Bob Yawger, director of the futures division at Mizuho Securities USA Inc in NY.

Brent has retreated below the $65/b earlier in the session despite a release from the American Petroleum Institute late Wednesday showing United States crude stocks had dropped by over 900,000 barrels last week.

Oil won buoyed earlier in the week after Saudi Energy Minister Khalid al-Falih said OPEC hopes to keep limiting crude output to leave the market tight.

US West Texas Intermediate crude futures were at $62.31 a barrel, up 63 cents, or 1%, from their last settlement, CNBC reported. Storage in American tanks and terminals probably increased by 2.9 million barrels last week, according to a Bloomberg survey.

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