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Strong Dollar and High Inventory Weigh on Crude Oil

By:
Barry Norman
Updated: Aug 20, 2015, 13:01 UTC

US crude oil fell below $90 per barrel, re-approaching a six-week low after a US government report showed oil supplies rose significantly

Strong Dollar and High Inventory Weigh on Crude Oil

Strong Dollar and High Inventory Weigh on Crude Oil
Strong Dollar and High Inventory Weigh on Crude Oil
US crude oil fell below $90 per barrel, re-approaching a six-week low after a US government report showed oil supplies rose significantly more-than-expected last week. The weekly EIA crude oil inventory report showed that inventories rose by 3.8mn barrels to 381.4mn barrels, total motor gasoline inventories decreased by 0.6mn barrels and distillate fuel fell by a steep 3.83mn barrels. Crude recovered to close slightly above the 90.00 price and is trading this morning at 90.32. The Energy Information Administration said crude oil stocks climbed 3.8 million barrels in the week ended March 1, compared with forecasts for a rise of 500,000 barrels. The sharp increase came as refiners unexpectedly cut crude-processing rates in the week by 480,000 barrels a day to their lowest level in nearly two years

A terrorist attack on a pipeline in Yemen turned up the geopolitical pressure on crude a notch but there was little market action. At an OPEC conference in Vienna, the oil minister of the United Arab Emirates was outspoken about the threat to the cartel from rising U.S. oil and gas production.  After the Keystone XL oil pipeline cleared an important hurdle last week, critics of the project are searching for ways to force more of the delays that have dogged it for more than four years already.

Indonesia plans to stop further decline in its oil output this year and hold it at 830,000 barrels per day, but still hopes to raise production to 1 million bpd by end-2014, the head of the energy regulator said yesterday.

The dollar extended gains against the euro and yen, after a report showed US private-sector employers added 198,000 jobs in February, another sign of improvement in the labor market.  The ICE dollar index, rose to 82.49. US factory orders printed better than expected, which is supporting the demand side of crude oil.

Natural gas declined the most in 3-weeks on NYMEX, on forecasts for moderating weather that would limit demand for the heating fuel after a winter storm passes through the North-east. U.S. natural gas futures ended lower on Wednesday pressured by profit taking and overall high inventories. Natural gas is expected to move in a range as inventories expected today will keep prices in check. Natural gas on the New York Mercantile Exchange ended down 5.9 cents, or 1.7 percent, at $3.47, after trading between $3.462 and $3.55.

In natural gas new yesterday, Exxon Mobil Corp said on Wednesday its oil and natural gas production would fall about 1 percent in 2013, but growth will return as more major projects are started over the next five years. Kinder Morgan Texas Pipeline LLC (KMTP) requested authorization from U.S. federal energy regulators to allow it to ship more natural gas from Texas to Mexico as companies line up to capitalize on the domestic natural gas shale boom

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