New York: Oil prices fell 3 per cent on Tuesday, with US crude extending losses for a fifth straight day, as the dollar rallied amid evidence that the United States and top oil exporter Saudi Arabia were pumping more than the world needed.
North Sea Brent and US crude were down more than $1 per barrel each as the dollar hit two-week highs against a basket of currencies, making crude and other dollar-denominated commodities less affordable for holders of money such as the euro.
The selloff in oil also came ahead of Tuesday's end-of-business expiry in US crude's front-month contract, which often results in heavier than usual market activity. Volume in US crude's July contract, the new front-month from Wednesday, was markedly higher than the expiring June, Reuters data showed.
The tumble in crude occurred despite an industry report scheduled later in the day that was expected to cite a third straight weekly decline in US crude stockpiles.
The American Petroleum Institute report (API) is due at 2030 GMT (2:00 a.m. in India), before official inventory numbers on Wednesday from the US government's Energy Information Administration.
"There is certainly a degree of profit-taking going on today before the expiry of the June contract, but it's primarily driven by the dollar's strength," said Sal Umek of the Energy Management Institute in New York.
"Regardless of what the API and EIA say, we are nearly 90 million barrels higher in US crude, and about 14 million higher in gasoline, from a year ago, putting us well above the five-year average."
US crude's front-month was down $1.83 at $57.60 a barrel by 1553 GMT (9:23 p.m. in India).
Brent fell $1.75 to $64.52.
Goldman Sachs said it expects the oil rally since the end of the first quarter to fizzle and US crude futures to trade near the year's low at around $45 a barrel by October.
Saudi Arabia's crude exports hit their highest in almost a decade in March, official data showed on Monday.
Analysts said investors were also less worried over the risks to Middle East oil supplies from fighting in Iraq, where Shi'ite militiamen have been deployed to battle Islamic State which seized the city of Ramadi. Saudi-led forces are meanwhile carrying out strikes in Yemen against Houthi rebels aligned to Iran.
"Such concerns are exaggerated," said Carsten Fritsch, analyst at Commerzbank. "In actual fact, the oil supply from the region has continued to grow."
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
