Oil Steadies At 86 Dollars As Dollar Rallied

Oil is to trade at 86.41 dollars a barrel on Tuesday, down from Monday’s 18-month high as the dollar rallied, following strong U.S economic data.

U.S crude for May delivery CLc1 fell 21 cents , off Monday’s peak of $86.90 a barrel, the highest intraday figure struck since October 2008. ICE Brent LCOc1 declined 22 cents to 85.66 dollars Tuesday in London.

Oil prices rose more than eight per cent in the five sessions to Monday, their sharpest five-day winning streak this year.

There was no trading on the New York Mercantile Exchange on April 2 because of Good Friday.

“Oil made a very crucial break above 82 dollars a barrel last week, but if there are any slight falls (Tuesday) it could be ascribed to the dollar.

A stronger dollar should mean weaker oil prices,” said broker Christopher Bellew at Bache Commodities.

The dollar gained nearly 0.4 per cent against a basket of currencies.

A stronger dollar makes purchases of dollar-denominated commodities more expensive for non-U.S buyers.

Also buoying the dollar was data on Monday showing U.S. services sector grew at its swiftest in nearly four years in March and an unexpected rise in future home sales in February, which bolstered hopes for a sustainable economic recovery and job growth.

Attention in the oil market was set to shift to U.S inventory statistics due later on Tuesday and on Wednesday.

Crude inventories in the United States, the world’s largest energy consumer, probably gained for a 10th consecutive seven-day period of measurement in the U.S last week, a Reuters survey showed.

Crude stockpiles were forecast to have risen 1.7 million barrels, according to a Reuters poll, while a 1.4 million drawdown was expected in both gasoline supplies and distillate stocks, comprising heating oil and diesel.

The American Petroleum Institute releases its industry report on Tuesday, followed by government figures from the U.S. Energy Information Administration ,today