Oil prices fall on strong dollar, U.S. output rise expectations
By Scott DiSavino
NEW YORK (Reuters) - Oil prices fell on Wednesday to their lowest in a week, on a strong dollar and expectations that U.S. producers would boost output even as OPEC's output fell from a record high.
U.S. shale production is set to snap a three-month decline in February, the U.S. Energy Information Administration said on Tuesday, as energy firms boost drilling activity.
Brent crude ended the session at $53.92 per barrel, down $1.55 or 2.79 percent, while U.S. crude settled at $51.08, down $1.40, or 2.67 percent. Ahead of settlement, both contracts sank to their lowest since Jan. 11.
Prices briefly pared losses in post-settlement trade after data from the American Petroleum Institute (API) showed that U.S. crude stocks decreased by 5.04 million barrels in the week to Jan. 13. Analysts had expected a decrease of 342,000 barrels. [API/S]
Weekly inventory data from the EIA will be released on Thursday at 11 a.m. EST (1600 GMT), delayed a day because of the United States' Martin Luther King Jr. holiday on Monday.
The dollar strengthened against a basket of currencies, rising about 0.6 percent, which pressured greenback-denominated oil.
The EIA projected oil production in the biggest U.S. shale fields would rise by 40,750 barrels per day (bpd) to 4.748 million bpd in February.
"The petroleum markets have turned lower again in Wednesday trade amid talk that higher oil prices will translate into additional U.S. shale-oil production as a counter-balance to OPEC efforts to trim supply and reduce excess inventories," Tim Evans, Citi Futures' energy futures specialist, said in a note. Continued...