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US crude ends slightly higher; Brent slips 1.4%

Workers from Select Energy Services at a Hess fracking site near Williston, N.D.
Andrew Cullen | Reuters
Workers from Select Energy Services at a Hess fracking site near Williston, N.D.

Brent crude oil fell on Tuesday as the dollar regained its footing against the euro and fears of global oversupply persisted, while U.S. crude managed to end slightly higher on strong domestic economic data.

The fall in Brent came after the dollar reversed early losses to rise 0.4 percent against the euro, making dollar-priced commodities more expensive in the euro zone.

Brent futures for May delivery declined 1.5 percent to $55.15 a barrel, having touched a session low of $54.93. U.S. crude settled 6 cents higher at $47.51 a barrel.

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The U.S. Commerce Department announced that new home sales jumped 7.8 percent to a seasonally-adjusted annual rate of 539,000 units last month, the highest since February 2008. Financial information services firm Markit announced that its U.S. Manufacturing Purchasing Managers' Index rose to its highest reading since October.

"Today it seems as if the market's been catching its breath after reaching its six-year lows last week," Tradition Energy senior analyst Gene McGillian said. "The positive economic reports have helped."

U.S. crude stocks, already at their highest in at least 80 years, were forecast to have risen for an 11th record-breaking week, a preliminary Reuters survey showed.

Six analysts, polled ahead of weekly inventory reports from industry group the American Petroleum Institute and the U.S. Energy Information Administration, turned in an average forecast for a crude stock build of 5 million barrels last week.

In the week to March 13, U.S. crude stocks rose nearly three times as much as expected.

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Oil prices were also under pressure from data showing factory activity in China slipped in March, adding to concerns about growth in the world's second largest economy and top oil importer. U.S. factory activity increased slightly.

The Chinese data followed comments from OPEC kingpin Saudi Arabia that it is pumping around 10 million barrels of crude per day, close to an all-time high and some 350,000 bpd above the figure it gave OPEC for its February output.

OPEC's decision to fight for market share rather than cutting output has contributed to a halving in oil prices since June as the global surplus of oil supplies has grown.

"The Saudi Arabian oil minister had only just emphasized at the weekend that his country is not willing to bear the burden of production cuts on its own," Commerzbank analyst Carsten Fritsch said.

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BP lifted its force majeure on oil loadings from Angola's Saturno stream, which typically exports about 150,000 barrels per day. The suspension in operations began on March 16 when a power loss at an offshore facility cut off power to some fields in Angola.

The market is expected to be at its weakest in the second quarter as winter fuel demand wanes while peak summer driving activity is yet to kick in. Energy consultancy FGE forecasts a global surplus of 2 million barrels per day between April and June.

"We expect crude prices to be pressured once again," FGE said in a note.

Correction: U.S. crude settled 6 cents higher at $47.51 a barrel.