U.S. oil closed lower on Tuesday, pressured by the possibility that U.S. shale oil producers could increase drilling activity and by a stronger dollar.
U.S. drillers cut the number of rigs by just one last week, data showed on Friday, and Goldman Sachs said prices were at a level that would spur activity. The dollar could rally further, Morgan Stanley said, adding to a growing list of headwinds crude faces that include rising OPEC supply.
"The main factor weighing on prices is the significantly appreciating U.S. dollar," said Carsten Fritsch, analyst at Commerzbank. "What is more, the decline in drilling activity in the U.S. that has been ongoing for 23 weeks appears to have stopped."
More drilling in the United States would lessen the prospect of a tighter oil market in coming months, one of the factors that have helped Brent rise from a near six-year low close to $45 in January.