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MW: Oil moves further below $60 as dollar firms up
 
Crude-oil futures fell in early European trade on Monday as a rising dollar put pressure on the commodity as holidays across some major markets, including the U.S., were expected to keep trading thin.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July CLN5, -0.79% traded at $59.31 a barrel, down $0.67 in the Globex electronic session. July Brent crude LCON5, -0.54% on London’s ICE Futures exchange fell $0.20 to $65.17 a barrel.

The weaker trend for oil prices came as the dollar gained ground across major currencies. Worries about Greece were a part of that action. A strengthening dollar weakens the appeal of crude, which is denominated in dollars, for holders of other currencies.

Read: Dollar up against yen, euro

U.S. oil prices lost 1.4% last week, snapping a three-week winning streak and ending the week below the $60 mark. Brent crude in London lost 2.2% last week and has been down for two of the past three weeks.

The number of oil rigs in the U.S. fell by only one last week, according to data from oil services company Baker Hughes, raising concerns that U.S. shale production could rebound quickly on the back of stronger oil prices. Nymex crude is up around 12% year-to-date.

“For oil, the burden of proof has shifted to how U.S. producers will respond to the recent rally and whether low-cost producers can sustainably deliver higher production,” analysts at Goldman Sachs said in a report over the weekend.

The bank said its forecast for sustained low prices has not materialized, delaying the rebalancing of the oil market, due to a combination of abundant capital entering the U.S. oil sector, the perception of improving fundamentals stemming from lower capex and rig-count, and higher than expected global demand.

Signs of stronger oil demand both in the U.S. and China, two of the world’s largest oil consumers, have helped support oil prices in recent weeks.

Read: 5 scenarios for oil prices, including ‘meltdown’

China’s transportation demand remains strong, helping keep oil demand growth above 8% for a second month, Standard Chartered analysts said. The country’s crude oil imports surged in April, exceeding 7 million barrels a day for the second time to a new record of 7.4 million barrels a day.

China’s higher imports were led by Saudi Arabia and Iraq, with Saudi Arabia’s exports to China at its highest since January 2013, StanChart said. “It appears to us that China is playing a strong role in the global market rebalancing, which is occurring faster than the consensus expectation,” they added.

Barclays analyst Miswin Mahesh said the recovery in oil prices over the first quarter was also helped by stronger gasoline demand from Asian countries like India, Philippines and Thailand, indicating strong consumer demand as opposed to industrial demand.

“In the absence of strong economic undercurrents, price elastic consumption growth is likely to be the biggest source of this rebound,” Mahesh added.

Also read: OPEC may condemn the world to an oil glut for years

Nymex reformulated gasoline blendstock for June RBM5, +0.14% — the benchmark gasoline contract — rose 158 points to $2.0697 a gallon, while June diesel traded at $1.9577, 52 points higher.

ICE gasoil for June changed hands at $599.75 a metric ton, up $0.25 from Friday’s settlement.
Source