Crude oil futures lose ground as dollar strengthens

PanARMENIAN.Net - Crude oil futures lost ground in electronic trading on Wednesday, June 15, as the dollar strengthened, ahead of the release of a closely watched inventory report.

Crude for July delivery fell 44 cents, or 0.4%, to $98.93 a barrel on the New York Mercantile Exchange during Asian trading hours, according to MarketWatch.

Moderately positive economic reports out of the U.S. and China, along with a weaker dollar, fuelled a rally of more than 2% earlier in the North American session.

The U.S. Department of Energy Information Administration (EIA) releases its weekly inventories on Wednesday.

Analysts polled by Platts expect the EIA to show a decline in crude-oil stocks of 1.9 million barrels, a rise in gasoline stocks of 1.3 million barrels, and an increase in distillates by 1.1 million barrels.

A report from the American Petroleum Institute late Tuesday showed crude-oil inventories fell 3 million barrels in the week ended June 10.

Gasoline stockpiles rose 1.1 million barrels, according to the trade group, and supplies of distillates declined 426,000 barrels.

Analysts at Barclays Capital said “oil demand remains very well supported,” with Chinese data for May still painting “an extremely positive picture for underlying oil demand.”

“We would expect International Energy Agency and the Organization of Petroleum Exporting Countries secretariat’s projections to get revised higher over the course of the next few months, with a potential boost to diesel demand from the ongoing hydro-shortages providing a further boost to oil demand relative to expectations,” the analysts said.

The dollar gained on Wednesday as euro-zone debt fears resurfaced. A stronger greenback tends to discourage investors from buying dollar-priced commodities such as oil.