Dollar rally sinks oil; Brent down more than U.S. crude
By Barani Krishnan
NEW YORK (Reuters) - A rallying dollar sent oil prices sharply lower on Tuesday, with Brent falling more than U.S. crude as players took profits on recent highs in Brent's premium, traders said.
Expectations of a mid-year U.S. interest rate hike pushed the dollar to multi-year highs, making commodities denominated in the greenback costlier for holders of other currencies. [USD/]
Brent, the London-traded global oil benchmark, settled almost 4 percent lower.
In New York, U.S. West Texas Intermediate (WTI) crude closed down more than 3 percent, pressured by the strong dollar and expectations that government data would show another record high in U.S. crude inventories last week from supply builds.
The American Petroleum Institute (API), an industry group, however, said after market settlement that data from its oil producing members showed an inventory drop of over 400,000 barrels instead for last week. [API/S]
The API data is a precursor to official stockpile numbers due on Wednesday from the U.S. government's Energy Information Administration. Reuters' own survey calls for a stock build of 4.4 million barrels for the week ended March 6. [EIA/S]
Brent LCOc1 settled at $58.39 a barrel, down $2.14, and U.S. crude CLc1 finished the session at $48.29, falling $1.71.
"The dollar's might is creating unexpected headwinds for oil. Brent particularly is taking it harder than WTI as people unwind and take profit in the spread between the two," said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow, New York. Continued...