Oil Lower as Strong USD Overrides OPEC Agreement

Oil slipped further below $57 barrel on Monday as a stronger dollar and ample U.S. supplies outweighed OPEC output curbs and rising tensions between the United States and Iran.

The dollar fell 0.3 percent versus a basket of currencies. U.S. energy companies added oil rigs for a 13th week in 14, data showed on Friday, and U.S. crude inventories rose by more than expected last week.

Brent crude was trading at $56.56 a barrel by 1402 GMT, down 25 cents, having touched an intra-day high of $57.13. U.S. crude was down 13 cents at $53.70.



“It’s most likely the stronger U.S. dollar,” said Commerzbank analyst Carsten Fritsch of the reason for the dip in oil. A stronger dollar makes crude more expensive for other currency holders and usually weighs on the oil market.

Oil prices, while supported by supply cuts agreed by the Organization of the Petroleum Exporting Countries and a new spike in tension between Iran and the United States, are struggling for new direction.

“The tug-of-war between oil bulls and bears continued last week and there are no clear signs who could turn out to be the winner,” said Tamas Varga of oil broker PVM.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza