Crude prices declined weighed down by a robust dollar and evidence that Saudi Arabia, the world’s biggest crude exporter, and the US were producing more oil than there was demand for.
The dollar strengthened against the Euro after a high ranking official at the European Central bank would intensify its bond-buying program.
A stronger dollar is bearish for crude demand as it makes commodities denominated in dollars like oil expensive for holders of foreign currencies.
“The surging dollar is having a broadly negative effect on the general commodities space … especially crude oil as the ‘long oil/short dollar trade’, which was a popular position among speculative money managers over the last few weeks, continues to come unwound,” Tyler Richey, an analyst for the 7:00’s Report, told Market Watch.
Light sweet crude for June delivery most recently declined by more than $2.20 or 3.45% to $57.98 a barrel on the New York Mercantile exchange. The US benchmark has recorded declines in the last five sessions, its longest losing streak since March.
The June front month contract expires today at the close of trading.
The more actively traded July contract most recently dipped by $1.13 or 1.9% to $59.11 a barrel.
Brent for July delivery fell by $2.02 or 3.10% to $64.15 a barrel on the London based ICE futures exchange.
Traders are, however, still awaiting the weekly inventory growth report by the American Petroleum Institute later in the day and the US Energy Information Administration on Wednesday.
Crude exports from Saudi Arabia hit their highest in ten years in March according to an official report released on Monday. The OPEC leader exported 7.8 million barrels a day in March up from 7.3million barrels per day in the previous month.
“According to official data… Saudi Arabia exported just shy of eight million barrels of crude oil per day in March — the highest export volume in more than nine years,” analysts at Commerzbank told Yahoo News.
“Global oversupply with weak demand continues to put a cap on prices despite geopolitical unrest raising concerns about a disruption in the Middle East.”
To contact the reporter of the story: Jonathan Millet at email@example.com