Oil prices decline as US dollar gains strength

17 February 2021 (Last Updated February 17th, 2021 11:14)

Global crude oil prices edged down after a two-day rally on Texas supply disruptions after the US dollar climbed.

Oil prices decline as US dollar gains strength
Norway deterred closure of major offshore fields. Credit: Kristina Kasputienė from Pixabay.

Global crude oil prices edged down after a two-day rally on Texas supply disruptions after the US dollar climbed.

Brent crude fell by $0.40, or 0.6%, to $62.95 a barrel while the US West Texas Intermediate (WTI) crude futures dropped by $0.33 or 0.6% to reach $59.72 a barrel, reported Reuters.

Axi chief market strategist Stephen Innes was cited by the news agency as saying: “Oil is trading lower via a stronger US dollar, which is gaining a head of steam with US (treasury) yields ripping higher.”

Brent price also dropped after Western Europe’s largest oil and gas producer Norway deterred closure of major offshore fields and a strike by oil workers after agreeing on new wage terms by workers with operator Equinor.

Rystad Energy analyst Paola Rodriguez-Masiu said: “Yet the strike was avoided …As a result, with oil supply unaffected, Brent gains had to be reversed to a certain extent.”

Meanwhile, oil supply in the US remains strained as cold weather led to a halt of 500,000bpd to 1.2Mbpd of crude production in the Permian Basin in Texas.

According to calculations by Reuters, the deep freeze knocked out nearly one-fifth of the refining capacity in the country.

Innes added: “This is one of the worst Mother Nature catastrophes I can ever remember while catching the oil complex wrong-footed at the supply levels.”

According to Reuters analysts’ poll estimates, the crude stocks dropped 2.2 million barrels, on average, in the week ending 12 February.