Brent and U.S. crude slipped in choppy trading along with the seesawing dollar after the currency's early strength pressured dollar-denominated commodities.
Brent and U.S. crude slipped in choppy trading along with the seesawing dollar after the currency’s early strength pressured dollar-denominated commodities.
Limiting crude futures’ losses were falling Saudi crude exports and last week’s industry data showing a lower U.S. oil rig count.
U.S. refined products futures also oscillated on Monday. An increasing supply of refined products, especially diesel fuel being offered by Saudi Arabia, helped push U.S. ultra-low diesel futures to multi-month lows intraday, adding to bearish concerns about prices in the oil futures complex.
Brent September crude was down 30 cents at $56.80 a barrel at 11:29 a.m. EDT (1529 GMT), having swung from $56.45 to $57.44.
U.S. August crude was down 47 cents at $50.42. The August contract expires on Tuesday.
“The complex is seeing selling pressures amidst further dollar strengthening that is prompting broad-based commodity liquidation,” Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a research note.
Before relinquishing early strength, the dollar jumped to three-month highs on expectations of rising U.S. interest rates, sending gold prices to their lowest in more than five years and helping pressure copper prices to near two-week lows.
A stronger dollar makes crude more expensive for investors using other currencies and rising U.S. interest rates are expected to curb liquidity, possibly adding to price pressures on crude oil.
In the United States, drillers cut seven oil rigs last week following two weeks of increases, a report by oil services company Baker Hughes Inc said on Friday.
However, as refineries around the world continue to operate at near-maximum levels to benefit from strong profit margins, there are signs a glut in the crude oil market may be shifting to refined products.
“The big fall in U.S. rig counts since last September has not had a negative impact on domestic production and the reduction in Saudi crude oil exports is due to domestic refinery demand as the Kingdom is turning into a significant product exporter,” analysts at PVM wrote.
Refined product inventories at Europe’s Amsterdam-Rotterdam-Antwerp storage hub rose to an all-time record last week.
Strong increases in refinery operations in recent months are set to slow in the second half of this year, hitting demand for crude oil, Vienna-based consultancy JBC Energy said.
“We expect global crude runs to be in the process of peaking for this year.”