Brent crude dips below $58 on strong dollar and supply

Tue Mar 10, 2015 7:47am EDT
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By Claire Milhench

LONDON (Reuters) - Brent crude futures dipped below $58 a barrel on Tuesday as the dollar hit multi-year highs and the oil market remained hobbled by oversupply and weak demand.

The U.S. dollar hit a near 12-year peak against the euro and an eight-year high against the yen, hurting commodities priced in dollars by making them more expensive for holders of other currencies.

At 7.31 a.m. EDT, Brent LCOc1 was down 79 cents at $57.74, while U.S. crude CLc1 was 45 cents lower at $49.55.

Traders and analysts said there was a risk of further falls as speculative net long positions were so high, particularly in Brent, whilst the fundamental picture remained one of weakness with no sign of any slowdown in production.

"In order to balance the market we need the supply glut to be brought down, by rising demand or lower supply," Ole Hansen, senior commodity strategist at Saxo Bank, said.

Demand from China, the world's second-largest oil consumer, slowed in February as the Lunar New Year holiday cut into shipping volumes.

At the same time, global refinery maintenance is about to peak, with global offline capacity assessed at 5.7 million barrels per day (bpd) in April, according to Energy Aspects.

"Most of the supportive factors for Brent are starting to fade," they said in a note on Tuesday, pointing out that supplies hit by weather and technical issues were returning.   Continued...

An oil well is seen near Denver, Colorado February 2, 2015.   REUTERS/Rick Wilking