Brent oil futures slipped to just above $57 dollars a dollar as the dollar hit a 12 year high and the global crude inventories continued to build with demand remaining weak.
At around 1400 GMT Brent, the global benchmark, had declined more than $1.52 at about $57.01 a barrel marking a resurgence from its intraday low of $56.81 on the ICE futures in Europe.
“Most of the supportive factors for Brent are starting to fade,” said Energy Aspects in a note released Monday. “We expect prices to fall in the coming weeks.”
US oil prices had gained slightly on Monday after a report suggested that the inventories at Cushing, Oklahoma, an important storage and delivery point for the key Nymex contract had risen less than expected last week.
According to reports by the Wall Street Journal, there are still widespread concerns, however, that the inventories in Cushing could hit maximum capacity sending the prices of the commodity in the US plummeting.
Light, sweet crude oil for April delivery most recently slid 70 cents or about 1.4% to $49.30 on the New York Mercantile Exchange.
The US dollar, on the other hand continued its resurgence against other currencies hitting a 12 year high against the Euro and an 8 year high against the Yen. A strong dollar hurts commodity prices that are priced in dollars as it renders them much more expensive for holders of other currencies.
According to a report by the Energy Information Administration on Monday, US shale oil output is expected to be at its lowest in four years this year.
This low output coincides with refineries returning from seasonal maintenance to bring relief to an oil market that has seen a decline in prices by half since June last year.
“You have refineries coming back out of maintenance, and production getting cut back,” Carl Larry, head of oil and gas for Frost & Sullivan LP in Houston told Bloomberg.
“Everything could come together where, all of a sudden, everyone thought there was plenty of supply and there’s not.”
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