Oil Prices Fall Sharply on Dollar

Oil prices fell by up to 3 percent for a second straight day on Wednesday as a resurgent dollar weighed on the market amid concerns that U.S. crude supplies may have started rising again after three weeks of draws.  Industry group American Petroleum Institute (API) said after the market’s settlement that U.S. crude inventories rose by 1.3 million barrels last week.

A Reuters poll of nine analysts estimated a crude stock drawdown of 900,000 barrels on average, which would mark a fourth consecutive week in inventory declines. Data from the U.S. Energy Information Administration (EIA) on Friday will show how accurate those estimates are.  Gasoline RBc1 and heating oil HOc1 prices fell more than 2 percent, extending the slide across the fuels complex, on bets that U.S. refineries will be operating at full swing with the end of maintenance season.

The dollar soared against major currencies on speculation about the first U.S. interest rate hike in years. A stronger greenback makes dollar-denominated commodities, including oil, less affordable in other currencies.  Other factors held little sway, including France’s warning to Iran that it was ready to block a final deal on Tehran’s nuclear program unless Iran provided full access to inspectors. Iran needs the nuclear deal to unlock sanctions on its crude exports.