Crude prices settled lower after a robust dollar and concerns on a growth in supply offset the support offered by clashes in the Middle East.
Saudi Arabia reported that its crude exports were at their highest in more than a decade to cause oil futures to erase early morning gains on reports of a major advance by the Islamic State Islamists in Iran and a fresh wave of air strikes on Yemen.
The supply report coupled with a 1% growth in the dollar against a basket of other major currencies halted an oil rally on wagers that a curtailment on output and positive global economic outlook would increase oil demand and reduce supply.
“It took away some of the momentum in the market,” Phil Flynn, an account executive at futures brokerage Price Futures Group in Chicago, told the Wall Street Journal.
“The market really seemed to want to move higher on geopolitical risk, but talk of more supply coming into the market eased those concerns.”
Light sweet crude for June delivery slipped dipped by 26cents or 1% to settle at $59.43 a barrel on the New York Mercantile Exchange. The US benchmark had earlier in the day recorded a $1 gain on the volatility in the Middle East.
Brent Futures, the global benchmark, slipped by 54 cents or 0.8% to $66.27 a barrel on the London based ICE futures exchange.
The Thompson Reuters dollar index recorded a 1% advance in the value of the dollar on expectations that economic data due this week would hasten the possibility of a rate hike.
“The fact that the dollar is reasserting its strength on oil despite the major geopolitical tensions in the Middle East shows that not everyone is convinced the oil rally we’ve had of late should continue,” Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Hollow in New York, told Reuters.
To contact the reporter of the story: Jonathan Millet at firstname.lastname@example.org