Oil was under pressure as a robust dollar weighed down oil prices ahead of weekly inventory data expected to show that US crude demand was growing with the peak US driving season underway.
Traders also focused on comments by the big market players with the Organization of Petroleum Exporting Countries expected to meet on June 5 in Vienna, Austria.
Crude prices advanced in morning trading then tailed off in the afternoon mirroring moves by the dollar with strengthened against a basket of foreign currencies in the afternoon.
A stronger dollar is bearish for the demand of dollar denominated commodities like oil as it makes it more expensive to holders of other currencies.
“Crude oil is at the mercy of the dollar index,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc., told the Wall Street Journal.
“You’ve got so many other pieces you would think would be supportive, but [the market] is totally discounting them.”
Light sweet crude for June delivery ended 52 cents or 0.9% down at $57.51 a barrel on the New York Mercantile Exchange. The US most active contract has now declined for three straight sessions and is at its lowest settlement this month.
Brent for July delivery slid $1.56 or 2.6% at $62.06 a barrel on the London-based ICE Futures Exchange. This is the global benchmark’s lowest settlement in more than a month.
“The crude complex is being pushed and prodded around by movements in the currency markets and mumblings, rumblings and rumors swirling around OPEC ahead of its meeting next week”, Matt Smith, commodity analyst at Schneider Electric, told Market Watch.
“The meeting is expected to pass with little excitement, as the cartel falls into a conga line of compliance with Saudi’s view,” he said. Saudi Arabia, OPEC’s largest oil producer, has been reluctant to cut production despite the hefty drop in prices for fear of losing market share.
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