- Dollar index rises for second day
- Chinese oil refiner demand falters
- OPEC production remains stronger despite promised cuts
Oil prices fell on Tuesday, extending a heavy sell-off after a surge in the dollar and weighed down by signs of weaker demand in China, the world’s second-largest consumer.
Benchmark Brent crude was down 55 cents at $50.18 a barrel by 1330 GMT. U.S. light crude was 45 cents lower at $47.14.
Chinese oil refineries operated in July at their slowest daily rates since September, official data showed. The drop was steeper than expected, raising concerns over the state of Chinese demand and the level of domestic stocks.
Ample supply from big oil exporters, including members of the Organization of the Petroleum Exporting Countries and the United States, also encouraged investors to sell long positions bought in July during a period of rising prices, analysts said.
Brent and U.S. crude reached two-month highs in early August but have dropped in the last few days, with falls accelerating on Monday.
“The focus remains on OPEC, U.S. inventories and disappointing China demand,” said Hans van Cleef, senior energy economist at Dutch bank ABN Amro in Amsterdam. “Those concerns have triggered profit-taking after a strong run-up in July.”
The dollar rallied on Tuesday on an easing of tensions around North Korea. A stronger dollar tends to limit demand for oil among buyers paying in other currencies.
The dollar index, which measures its strength against a basket of six major currencies, climbed 0.4 percent on Monday and was up 0.3 percent on Tuesday.
An announcement by the Nigerian subsidiary of Royal Dutch Shell that it had lifted a force majeure on Bonny Light crude exports also added to the market surplus.
U.S. crude stockpiles are likely to have fallen for a seventh consecutive week, along with a probable drop in distillate and gasoline inventories, a Reuters poll showed.
The weekly U.S. crude inventory report from the American Petroleum Institute, an industry group, was due to be published later on Tuesday. Official U.S. government statistics will be released on Wednesday.
Efforts by OPEC and other producers to limit output have helped lift Brent past $50 a barrel, but production elsewhere, particularly in the United States, has undermined prices.
U.S. shale oil production is expected to grow for a ninth consecutive month in September to 6.15 million barrels per day, the U.S. Energy Information Administration said on Monday.