Oil price rally reverses as dollar ticks higher
Singapore: Oil prices fell in Asia today, reversing sharp gains in the previous session, hit by a strong dollar and persistent concerns over a global supply glut.
US benchmark West Texas Intermediate for October delivery, which expires at the end of the trading day, eased 39 cents to USD 46.29 in late-morning trade after spiking 4.1 per cent at its close in New York yesterday.
Brent crude for November dipped 37 cents to USD 48.55 a barrel following a 3.1 per cent surge in London.
“A resurgent US dollar weighed on crude prices. However, an improved risk tone could cushion oil prices on the downside,” said Bernard Aw, market strategist at IG Markets in Singapore.
The dollar climbed after three Federal Reserve presidents put the argument for borrowing costs the rise by year’s end, in a bid to soothe concerns about the global economy that were stoked by the bank’s decision to hold fire Thursday.
A strong greenback makes dollar-priced oil more expensive for holders of weaker currencies, hurting demand and prices.
Analysts have said yesterday’s strong price rebound looked more like a technical correction from heavy losses last week as the fundamentals of a crude oversupply outrunning demand remained intact.
Traders are also closely monitoring progress on Iran’s compliance under a deal with western powers to curb its nuclear ambitions in return for the lifting of sanctions that will allow it to export more oil.