LONDON—Oil prices declined on Tuesday, losing value as
the strength of the dollar dissuaded buyers.
The dollar gained versus the euro after a senior official at the
European Central Bank said the institution would " front-load" its
bond-buying program, snapping up more eurozone sovereign debt in
May and June to avoid having to buy large volumes during the summer
lull in July and August.
A stronger dollar makes oil more expensive for buyers holding
other currencies. The Wall Street Journal Dollar Index, which
tracks the dollar against a basket of other major currencies, rose
0.5%.
Brent crude for July delivery traded down $0.65, or 1%, at
$65.62 a barrel on London's ICE Futures exchange. On the New York
Mercantile Exchange, light, sweet crude futures for delivery in
June was trading down 0.9% at $59.69 a barrel.
Later Tuesday, the American Petroleum Institute will report U.S.
crude inventories for the latest week.
Meanwhile, investors are once again shrugging off fears that
fighting in nations across the Middle East could disrupt oil flows.
Mustafa Sanallah, the chairman of Libya's National Oil Co., on
Tuesday said the firm aims to produce on average 400,000 barrels a
day during 2015, despite the conflict that rages on in the Middle
Eastern nation.
As attention increasingly turns toward the meeting of the
Organization of the Petroleum Exporting Countries, analysts at
Petromatrix said they aren't expecting OPEC to cut output.
Crude oil from Saudi Arabia was up sharply in the last two
months, they wrote in a report. "Production and exports are also
increasing from Iraq and with Iran about to sign the final nuclear
deal at the end of June it is very difficult to see Saudi Arabia
suddenly changing directions for the OPEC meeting."
Meanwhile, analysts at PVM said they've been alarmed by recent
data, which suggests producers "are trying to compensate for
falling prices by pushing volume." They estimate that non-OPEC
members have increased production by 380,000 barrels a day over the
past year.
"Moreover we know that OPEC members are completely ignoring the
30 million b/d quota agreement and pumping as hard as they can. In
the U.S., the drilling rig decline has almost come to a halt and
North Dakota is even reporting a production increase," it says. "To
quote the IEA's understated conclusion 'the market's short-term
fundamentals still look relatively loose.'"
Nymex reformulated gasoline blendstock for June—the
benchmark gasoline contract—fell 0.9% to $2.0234 a
gallon, while ICE gas oil for June changed hands at $601.75 a
metric ton, down $7.00 from Monday's settlement.
Write to Matthew Cowley at matthew.cowley@wsj.com
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