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Oil price rally reverses as dollar ticks higher
[SINGAPORE] Oil prices fell in Asia Tuesday, reversing sharp gains in the previous session, hit by a strong dollar and persistent concerns over a global supply glut.
US benchmark West Texas Intermediate for October delivery, which expires at the end of the trading day, eased 39 cents to US$46.29 in late-morning trade after spiking 4.1 per cent at its close in New York on Monday.
Brent crude for November dipped 37 cents to US$48.55 a barrel following a 3.1 per cent surge in London.
"A resurgent US dollar weighed on crude prices. However, an improved risk tone could cushion oil prices on the downside," said Bernard Aw, market strategist at IG Markets in Singapore.
The dollar climbed after three Federal Reserve presidents put the argument for borrowing costs the rise by year's end, in a bid to soothe concerns about the global economy that were stoked by the bank's decision to hold fire Thursday.
A strong greenback makes dollar-priced oil more expensive for holders of weaker currencies, hurting demand and prices.
Analysts have said Monday's strong price rebound looked more like a technical correction from heavy losses last week as the fundamentals of a crude oversupply outrunning demand remained intact.
Traders are also closely monitoring progress on Iran's compliance under a deal with western powers to curb its nuclear ambitions in return for the lifting of sanctions that will allow it to export more oil.
On Monday, Iran said it independently collected samples at a suspect military site where illicit nuclear work is alleged to have occurred and later handed them to UN inspectors who were not physically present.
In an apparent bid to stave off criticism, the chief of the UN's International Atomic Energy Agency said "the integrity of the sampling process and the authenticity of the samples" were not compromised despite the absence of UN inspectors.