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Supply losses in Canada and Nigeria have lent support, but
cooler weather was expected to help firefighters battling
Canadian wildfires. Traders said Exxon Mobil is boosting output
at Nigeria's largest crude stream.
Brent crude was down $1.04 at $47.89 at 1137 GMT. It reached a
2016 high of $49.85 on Wednesday, only to close lower. U.S.
crude was down 83 cents at $47.36.
"The main factor weighing on prices is the much appreciated U.S.
dollar," said Carsten Fritsch, analyst at Commerzbank. "What is
more, rain forecast in the Canadian oil province of Alberta is
giving rise to hopes that the devastating wildfires there could
be brought under control."
Oil and other commodities came under pressure from the dollar,
which firmed as the minutes of the Federal Reserve's latest
policy meeting rekindled expectations for an interest rate
increase.
A stronger dollar makes commodities denominated in the U.S.
currency more expensive for holders of other currencies and
tends to weigh on oil prices.
Brent's 2016 high hit on Wednesday was supported by the supply
outages, but the rally ran out of steam after weekly data showed
an unexpected 1.31-million-barrel rise in U.S. crude
inventories.
"We feel that markets have moved too high, too far, too soon,"
said BNP Paribas in a report. "We still face a large inventory
overhang and for the most part, the outstanding supply outages -
Canada and Nigeria - are reversible."
Despite the outages and falling U.S. output as the near-halving
of oil prices since mid-2014 curbs investment by shale drillers,
OPEC production is at its highest in years thanks in part to
higher Iranian exports.
OPEC and non-members including Russia failed at an April 17
meeting to agree on an initiative to freeze output. OPEC meets
on June 2 to set output policy and is not expected to decide on
any measures to limit supplies.
(Additiona reporting by Keith Wallis and Henning Gloystein;
editing by Jason Neely and William Hardy)
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