A surging U.S. dollar pushed oil prices on Tuesday to their lowest settlement for the month of March, ahead of data that are expected to show a ninth straight weekly rise in U.S. crude supplies. On the New York Mercantile Exchange, crude for delivery in April settled at $48.29 a barrel, down $1.71, or 3.4%. The settlement was the lowest for a most-active contract since Feb. 26. Brent crude for April delivery on London’s ICE Futures exchange fell $2.14, or 3.7%, to end at $56.39 a barrel.
The dollar hit multiyear highs against the euro and the yen on Tuesday as traders focused on diverging monetary policy paths between the U.S., where the Federal Reserve is expected to begin raising rates, and the European Central Bank and Bank of Japan, which are maintaining ultra loose monetary policy A stronger dollar can weigh on commodities priced in the currency, making them more expensive to users of other currencies. But oil’s decline “cannot be entirely blamed on the dollar,” Fawad Razaqzada, technical analyst at FOREX.com told Market Watch. “Oil prices are simply falling because there is just too much of the stuff being produced, as evidenced, for example, by the recent sharp increases in U.S. oil inventories,” he said. “Until such a time we see a period of sharp and sustained declines in crude inventory levels, the path of least resistance for oil prices would remain to the downside.”
Weekly data on petroleum supplies are due out from the trade group American Petroleum Institute late Tuesday, and from the U.S. Energy Information Administration on Wednesday morning. The government report has already shown eight weeks of rising crude inventories in a row. Analysts polled by Platts forecast a climb of 4.2 million barrels in crude stockpiles. They are also looking for a decline of 1.7 million barrels in gasoline supplies and a fall of 2.3 million