Oil falls back on dollar, Kuwait stance that OPEC won’t slow output

By Barani Krishnan

NEW YORK (Reuters) – Oil prices fell on Thursday as a rebounding dollar and Kuwait’s stance that OPEC had no choice but to keep producing in an oversupplied market undercut a rally from the previous day.

Benchmark Brent oil and U.S. crude were down about 2 percent each, weighed by the dollar’s rise against most currencies after the greenback’s biggest tumble in 18 months on Wednesday.

In the previous session, Brent rose nearly 5 percent and U.S. crude about 3 percent on the dollar weakness.
“It’s dollar play all over again today,” said Phil Flynn, analyst at the Price Futures Group in Chicago. “The fact that the oil market is oversupplied is a given, so the only real variable now are currency moves and how they impact commodities demand.”

A stronger dollar weakens demand from holders of other currencies for commodities denominated in the greenback. The dollar rose 2 percent against the euro on Thursday, after its selloff on Wednesday on disappointment over the lack of a clear timeline for a U.S. interest rate hike. [USD/]

Brent oil was down $1.18 to $54.73 a barrel by 11:46 a.m. EDT (1546 GMT). It rallied more than $2, or about 5 percent, on Wednesday after the U.S. Federal Reserve hinted at a slower rate hike process than previously thought.

U.S. crude fell 82 cents to $43.84.

In Kuwait, oil minister Ali al-Omair said OPEC had to keep production steady, although he voiced concern about oil prices having been halved since the previous summer.

Source: reuters.com