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 The U.S. dollar hit a near 12-year peak against the euro and an
eight-year high against the yen, hurting commodities priced in
dollars by making them more expensive for holders of other
currencies.
At 7.31 a.m. EDT, Brent <LCOc1> was down 79 cents at $57.74, while
U.S. crude <CLc1> was 45 cents lower at $49.55.
Traders and analysts said there was a risk of further falls as
speculative net long positions were so high, particularly in Brent,
whilst the fundamental picture remained one of weakness with no sign
of any slowdown in production.
"In order to balance the market we need the supply glut to be
brought down, by rising demand or lower supply," Ole Hansen, senior
commodity strategist at Saxo Bank, said.
Demand from China, the world's second-largest oil consumer, slowed
in February as the Lunar New Year holiday cut into shipping volumes.
At the same time, global refinery maintenance is about to peak, with
global offline capacity assessed at 5.7 million barrels per day
(bpd) in April, according to Energy Aspects.
"Most of the supportive factors for Brent are starting to fade,"
they said in a note on Tuesday, pointing out that supplies hit by
weather and technical issues were returning.
Libya is expected to export more than two million barrels of crude
oil this week from two ports in the east, where output has topped
245,000 bpd.
"This could add to the bearish picture in Brent," Carsten Fritsch,
an oil analyst at Commerzbank, said. He said Brent had tried and
failed to regain the $60 a barrel level on Monday, which triggered
selling from short-term investors.
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"Brent could see further declines now, given the large overhang of
speculative long positions," he said.
U.S. crude has faired a little better helped by a report from market
data firm Genscape that showed a modest stock build last week at the
Cushing, Oklahoma, delivery point.
Investors are waiting for weekly U.S. inventory reports from
industry group the American Petroleum Institute and the U.S.
Department of Energy's Energy Information Administration to see if
the Genscape numbers are confirmed.
According to a Reuters survey, U.S. crude stocks are set to extend
their record build for a ninth week.
(Additional reporting by Keith Wallis in Singapore; editing by Jason
Neely)
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