Oil falls from 8-week high on dollar pressure

By Rebekah Kebede

NEW YORK (BestGrowthStock) – Oil prices fell from eight-week highs on Tuesday, pressured by a stronger dollar and uncertainty about an economic recovery.

U.S. crude futures for April fell 38 cents to settle at $81.49 a barrel, after reaching a low of $80.16 a barrel earlier. In London, North Sea Brent crude oil futures slipped 56 cents to settle at $79.91 a barrel.

“The petroleum markets have tipped back to the downside, with crude oil testing the $80 level from above, on selling prompted by an upturn in the U.S. dollar,” said Tim Evans, an energy analyst for Citi Futures Perspective.

The dollar, which for months has frequently been inversely correlated with oil prices, edged up on Tuesday against a basket of currencies, putting pressure on oil prices. (.DXY: )

A stronger dollar makes dollar-denominated commodities, such as crude oil, more expensive for holders of other currencies.

RBOB gasoline futures led the oil complex in losses, despite data from MasterCard SpendingPulse showing a 2.5 percent rising in gasoline demand in the week to March 5 versus the previous and a 5.4 percent gain against year ago levels.

Expectations for a build in U.S. gasoline and crude oil inventory build were also bearish for prices. Inventories of both crude oil and refined products in the United States have swelled as the recession has reduced fuel consumption in the world’s top consumer of oil.

A Reuters survey of analysts showed U.S. crude inventories rising for a sixth straight week as imports edged up and refinery utilization remained flat. (EIA/S: )

U.S. crude inventories gained 1.9 million barrels in the week to March 5, the Reuters poll showed, while gasoline stockpiles may have increased by 200,000 barrels.

The industry-funded American Petroleum Institute will publish inventory data on Tuesday at 4:30 p.m. EST (2130 GMT), followed by government statistics from the Energy Information Administration on Wednesday at 10:30 a.m. EST (1530 GMT).

NO CHANGE TO OPEC TARGETS

The Organization of the Petroleum Exporting Countries will keep oil production targets on hold when it meets in Vienna on March 17, but could raise output later this year as the world recovers from recession, pushing up demand for fuel, a Reuters poll showed on Monday.

OPEC ministers say they are content with oil prices where they are and analysts say they are unlikely to do anything to alter the current trading range between $70 and $85 per barrel.

Iran’s OPEC governor was quoted on Tuesday as saying the 12-country grouping may not necessarily increase output if oil demand rises, as other producers might boost their production.

The U.S. Energy Information Administration on Tuesday raised its forecast for non-OPEC crude oil production growth this year by 550,000 barrels-per-day this year to 50.82 million bpd.

In its monthly report, the agency also said it expected world oil demand to rise by 1.47 million barrels per day in 2010 from a year earlier.

Stock Investing

(Additional reporting by Robert Gibbons and Gene Ramos in New York, Christopher Johnson in London, Alejandro Barbajosa in Singapore; Editing by Marguerita Choy)

Oil falls from 8-week high on dollar pressure