Oil extends losses on strong dollar

March 16, 2010
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, SINGAPORE, Mar 16 – Oil prices fell further in Asian trade on Tuesday, pressured by a firm US dollar and ongoing concerns about demand in the United States, the world\’s top energy user, analysts said.

Fears that Beijing will take more steps to cool the Chinese economy also hit sentiment, they said.

New York\’s main contract, light sweet crude for April delivery eased 13 cents to 79.67 dollars a barrel.

Brent North Sea crude for April delivery was off 17 cents to 77.74 dollars.

"Prices were pressured by the stronger dollar and concerns that potential credit tightening in China might curb energy demand in the world’s second-largest oil consumer," analysts from Singapore\’s United Overseas Bank said.

The US dollar has gained ground in recent days as investors, nervous about the weak global equities market, turned to the greenback. The US currency is seen as a safe haven in times of investor uncertainty.

A stronger greenback tends to sap demand for dollar-priced crude because it becomes more expensive for buyers using weaker currencies.

Oil was also dampened by the latest economic data from the United States.

Federal Reserve data showed Monday that industrial production inched up 0.1 percent in February, grinding to a near-halt amid severe snow storms that crippled large parts of the east coast.

"Crude oil prices fell… due to a strengthening US dollar, while investors remain cautious ahead of a busy week in economic figures and the OPEC meeting in Vienna," said Sucden analyst Myrto Sokou in London.

The Organisation of the Petroleum Exporting Countries (OPEC) is widely expected to keep its official output quota at 24.84 million barrels a day at its meeting Wednesday.

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