Oil Extends Losses as Dollar's Gains Trigger Selloff
Oil fell on Tuesday, extending three days of losses as gains in the U.S. dollar triggered selling in commodity markets.
U.S. light sweet crude settled down 60 cents at $100.98 a barrel adding to losses of more than $4 from Monday when funds locked in commodity profits at the end of the first quarter. London Brent fell 13 cents to $100.17 a barrel.
Oil had also slipped on Monday after a week of heavy fighting in Iraq's oil port city of Basra ended, and workers ramped up flows on a nearby pipeline that had been damaged in a bomb attack.
Further pressure came from wider selling in commodities, with gold, copper and wheat prices down as the dollar rebounded on better-than-expected manufacturing data out of the United States and after a report showed U.S. chain store sales rose last week.
"We look for the U.S. dollar to generally guide pricing today now that military activity in southern Iraq has subsided and most financial markets are showing some stability," said Jim Ritterbusch, president of Ritterbusch & Associates.
Average oil futures prices surged to record highs during the first quarter of 2008, with the average for U.S. crude up 68 percent on a year-earlier and 8 percent higher than the preceding quarter.
The dollar was also helped by Swiss bank UBS and Germany's Deutsche Bank announcement of $23 billion in additional write-downs, which showed that credit problems are not limited to the United States.
Traders are also awaiting government data on weekly U.S. oil inventories due out on Wednesday for further signs that demand in the world's top consumer is being hit by wider economic problems.
"People are looking at U.S. gasoline demand and how stocks can be accumulated before the summer driving season. It depends on the U.S. economy," said Tetsu Emori, a Tokyo-based fund manager at Astmax.
A Reuters poll forecast the data for the week ending March 28 will show a 2.6 million build in crude stocks, a 1.6 million barrel draw in distillate inventories, and a 2 million barrel fall in gasoline stocks.