Oil slips from 18-month high as dollar strengthens

By Chris Baldwin

LONDON (BestGrowthStock) – Oil retreated from 18-month highs on Tuesday after rallying for five sessions in a row, as the dollar’s rise following strong U.S. economic data weighed on a number of key commodities.

U.S. crude for May delivery fell 29 cents by 0957 GMT, off Monday’s intraday peak of $86.90 a barrel, the highest since October 2008. ICE Brent declined 26 cents to $85.62 on Tuesday in London.

“Oil made a very crucial break above $82 a barrel last week, but if there are any slight falls (on Tuesday) it could be ascribed to the dollar. A stronger dollar should mean weaker oil prices,” said broker Christopher Bellew at Bache Commodities.

The dollar gained nearly 0.4 percent against a basket of currencies and traders turned bearish against the euro following reports Greece would seek $5-$10 billion from U.S. investors to help cover its May borrowing requirements.

A stronger dollar makes purchases of dollar-denominated commodities more expensive for non-U.S. buyers.

Also buoying the dollar was data on Monday showing U.S. services sector grew at its swiftest in nearly four years in March and an unexpected rise in future home sales in February, which bolstered hopes for a sustainable economic recovery and job growth.

INVENTORY STATISTICS

Oil prices rose more than 8 percent in the five sessions to Monday, their sharpest 5-day winning streak this year. There was no trading on the New York Mercantile Exchange on April 2 because of Good Friday.

Oil market attention will shift to inventory statistics due later on Tuesday and Wednesday, after the Energy Information Administration on Monday said U.S. gasoline prices rose to $2.88 a gallon in the last week, the highest since October 2008.

“The recent spike can be largely put down to rising crude oil prices. Compared to other products, gasoline demand is quite price-sensitive, illustrated by the fact that it was the only major oil product to show growth on a global basis last year,” analyst David Wech at JBC Energy wrote in a note to investors.

Crude inventories in the United States, the world’s largest energy consumer, probably gained for a 10th consecutive seven-day period of measurement in the U.S. last week, a Reuters survey showed.

Crude stockpiles were forecast to have risen 1.7 million barrels, according to a Reuters poll, while a 1.4 million drawdown was expected in both gasoline supplies and distillate stocks, comprising heating oil and diesel.

The American Petroleum Institute releases its industry report on Tuesday, at 4:30 p.m. EDT, followed by government figures from the U.S. Energy Information Administration on Wednesday at 10:30 a.m. EDT.

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(Additional reporting by Alejandro Barbajosa in Singapore, editing by Amanda Cooper)

Oil slips from 18-month high as dollar strengthens