Brent crude near $60 on supply glut, strong dollar

London (Dec 24)  Oil futures fell more than a dollar on Wednesday, with Brent trading near $60 per barrel, weighed down by strong supply in the United States and a rising dollar. 

Brent for February delivery dropped $1.66 to $60.03 shortly before 8 a.m. EDT. The contract settled up $1.58 on Tuesday.

U.S. crude fell $1.35 to $55.77, after settling $1.86 higher in the previous session, hurt by industry data that showed a surprise build in domestic crude stocks.

Data from the American Petroleum Institute, an industry group, showed U.S. crude stocks rose by 5.4 million barrels in the week ended Dec. 19. Analysts had expected a drop of 2.3 million barrels.

A supply glut in the United States and elsewhere has helped push oil down some 46 percent since it reached this year's peak above $115 per barrel in June.

"There was a large build in the API data and there are high stocks for now, although strong U.S. GDP growth should help demand," said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.

The dollar index stayed close to its highest since April 2006 after a revised third-quarter U.S. gross domestic product report blew past expectations to register the fastest pace of growth in 11 years.

A strong dollar makes commodities priced in the greenback expensive for holders of other currencies.

Investors now await official U.S. oil inventory data to be released by the U.S. government's Energy Information Administration later on Wednesday.

"Very likely Brent and WTI will remain steady, trading at around current levels" in the absence of production cuts or geopolitical risks, Yusuke Seta, commodity sales manager at Tokyo's Newedge Japan, told Reuters.

Source: Reuters