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Oil prices fall on profit taking, strong US dollar
[SINGAPORE] Oil prices slipped on Friday in thin Asian trade ahead of the Christmas and New Year holidays, wiping out some of the gains in the previous session as traders took profits. A strong US dollar also weighed on sentiment.
US West Texas Intermediate crude fell 31 US cents to US$52.64 a barrel as of 0127 GMT after settling 46 US cents, or 0.9 per cent, up in the previous session.
Brent futures for February delivery dropped 30 US cents to US$54.75 a barrel after ending the previous session up 59 US cents, or 1.1 per cent.
"I think it is the usual reversal of fortunes that exist in the Asian time zone after the previous session's close," said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance. "In this case there is some profit taking after the last session gains. Oil prices are also weaker due to the stronger US dollar," he said. "But overall, the fact the US dollar and commodities are soaring either tells you demand for commodities has picked up or there is a need for more supply," he added.
The US dollar index was slightly lower on Friday but was still close to a 14-year peak of 103.65 earlier this week.
A strong US dollar makes greenback-denominated commodities including oil more expensive for holders of other currencies.
Oil prices are trading in a band that's the highest since mid-2015.
Barratt has forecast US crude will trade around US$60 a barrel in the first quarter next year, while Brent will be around US$62-US$63 a barrel.
Prices are expected to be supported by a deal by the Organization of the Petroleum Exporting Countries and non-Opec oil producers to cut output by almost 1.8 million bpd from Jan 1.
Saudi Arabia's Energy Minister Khalid al-Falih said on Thursday he was confident there would be "a high level of commitment" from oil producers to abide by the pact curbing production.
That came as Talal Nasser Al Athbi, head of the Organization of Arab Petroleum Exporting Countries' (OAPEC) Executive Bureau on Thursday said that supply and demand in global oil markets should rebalance during the first or second quarter of next year.
But moves by Libya to boost oil production following the reopening of the country's main oil pipelines in the west could be overshadowed by an unresolved political power struggle and the risk of new blockades.