Oil prices drift amid stronger dollar, glut worries

[NEW YORK] Oil prices were little changed Friday amid the stronger dollar and concerns that the historic Iran nuclear deal could unleash more Iranian crude on the global market.

West Texas Intermediate crude for delivery in August slipped two cents to US$50.89 a barrel on the New York Mercantile Exchange. After falling for three straight days, the US benchmark WTI was at its lowest level since early April.

In London Brent North Sea crude, the international benchmark, closed at US$57.10 a barrel, an increase of 18 cents, on the September futures contract's first day of trade.

Since the beginning of the week, WTI has shed about US$2 a barrel, confirming a downward trend so far in July after a period of stabilisation around US$60 during the spring.

"The stronger dollar played all week long... and that's keeping pressure on prices," said Carl Larry, director of oil and gas for consulting firm Frost & Sullivan.

The US currency climbed this week after Federal Reserve Chair Janet Yellen reaffirmed the central bank's plan to raise zero-level interest rates this year, in what would be the first hike since 2006.

On Friday, the greenback traded at its highest level since late May against the euro, which fell to US$1.0841.

A stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies.

Abundant supplies of crude oil continued to put pressure on the market. The agreement between Iran and six major powers for Tehran to curb its nuclear program, announced Tuesday, could lead to lifting sanctions that have slashed Iran's oil exports.

The idea that additional Iranian oil could enter the market, even if that was not expected to happen before 2016, continued to stoke "lots of concerns," said Bart Melek at TD Securities.

"We could see significant amounts of new oil from Iran hit the global market. Iran is said to have near 50 million barrels of crude ready to ship from tankers as soon as the lifting of the sanctions is performed," Mr Melek said.

AFP