Oil fell towards $82 a barrel today, extending the steepest one-day percentage loss in three months in the previous session, on rising oil inventories and a firm dollar.
The dollar surged to a one-year high against a basket of six major currencies. It climbed to its strongest since last May against the Swiss franc as share markets around Asia lost ground on heightening fears that Greece's debt woes could spread to other countries.
US crude for June delivery fell 23 cents to $82.51 a barrel earlier. The contract dropped $3.45, or 4 percent, to settle at $82.74 a barrel yesterday. In post-settlement trading, it ended electronic trading at $82.07, down $4.15 or 4.78 per cent, the largest one-day percentage loss since the 4.99 per cent slide on February 4th. London Brent crude lost 14 cents to $85.53 a barrel.
"The main influences now are the rise in the dollar, the sovereign concerns in the euro zone spreading into Portugal and Spain. I think a pretty important factor though going forward is the build in oil stocks in the United States," said Ben Westmore, an analyst at National Australia Bank.
"The price at those low $80s per barrel sort of mark is consistent with the market fundamental alone. I would expect oil price to track around the low $80s for the rest of the week." The dollar, which rose 0.21 per cent against a basket of currencies today, was supported by signs that the US economy was on the mend.
Data released yesterday showed pending US home sales rose 5.3 per cent in March while factory orders increased 1.3 per cent. Both numbers handily beat forecasts.
A strong US currency makes dollar-denominated commodities, such as oil, more pricey for holders of other currencies and tends to dampen crude prices.
Crude oil inventories at the key storage hub at Cushing, Oklahoma, rose by 1.7 million barrels to a record high of 36.3 million barrels, data from industry group the American Petroleum Institute (API) showed.
Petroleum stocks rose by 1.5 million barrels last week, sharply higher than a rise of 200,000 barrels analysts had expected.
Distillates, including heating oil and diesel, rose by 1.4 million barrels, versus expectations of a 1.7 million barrel rise. The US Energy Information Administration's report is set to arrive later today.
Crude oil prices have not been seriously impacted so far from a giant oil spill off the US Gulf Coast.
A flotilla of nearly 200 boats tackled a massive oil slick in the Gulf of Mexico yesterday, taking advantage of calm weather to intensify containment efforts while a scientist warned that a powerful current could carry the crude to Miami and points beyond.
Reuters