Oil prices drop as dollar gains further

[LONDON] Oil prices dropped on Tuesday as dealers weighed a strengthening dollar and geopolitical tensions that are undermining production in the crude-rich Middle East, analysts said.

US benchmark West Texas Intermediate for delivery in April fell 35 cents to US$49.65 a barrel.

Brent North Sea crude for April shed 78 cents to US$57.75 a barrel.

The euro tumbled on Tuesday towards a 12-year dollar low, hit by eurozone stimulus, growing US rate hike speculation and Greek debt concerns, dealers said.

In morning London deals, the European single currency sank to US$1.0735 - the lowest level since mid-April 2003. The region's stock markets also fell.

A stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies, denting demand and pushing prices lower.

Intensified fighting in Libya between rival militias and the emergence there of the Islamic State group supported higher crude prices.

Fighting in the north African state, a member of the Opec oil-producing cartel, has seen output slashed some tenfold, from a high of almost 1.5 million to 150,000 barrels a day, according to analysts.

Iraq, another Opec member, is also battling jihadists who spearheaded a sweeping offensive in June that overran large areas north and west of Baghdad.

Singapore's United Overseas Bank said oil remained under pressure as a stronger US dollar was "offsetting geopolitical tensions and the threat of output cuts in Libya and Iraq".

AFP