Oversupply and Strong Dollar Weigh on Falling Oil Prices

Reuters

Crude oil futures were lower on Monday as investors worried about oversupply and a strong dollar, but heating oil jumped about 6 percent for a second straight day due operational problems at major U.S. refineries.

Crude fell as the weekly decline in U.S. rigs drilling for oil slowed last week, raising worries that inventories, already at record highs, could swell further.

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The largest U.S. refinery strike in 35 years has also pressured crude prices.

Heating oil futures shot above $2.24 a gallon, the highest in nearly three months, as some of the biggest U.S. East Coast refineries struggled to restore operations after severe cold weather triggered outages. Sub-zero temperatures were expected to sweep through the region late on Monday, raising concerns about adequate heating supplies.

"It's a worry of high supplies with crude and tight supplies with heating oil," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

Benchmark Brent crude was down 30 cents at $59.92 at 1:35 p.m. EST.

U.S. crude's WTI, or West Texas Intermediate, futures were down $1 at $49.81.

While high supply was pressuring oil, a smaller-than-expected crude build in the Cushing, Oklahoma delivery point reported on Monday by oil services firm Genscape helped the market pare some losses. Genscape reported a build of 2.2 million barrels for Feb. 13-20, versus trade expectations for 4 million or more, a market source who saw the data said.

Oil has also been seeing quick "buying on dips", evidence that bulls were in more control than a few months ago, traders said. After percentage losses of between 9 and 18 percent each month from October to December, Brent consolidated in January and is up about 11 percent month-to-date.

"There is the notion that a bottom has been set at $55 for Brent and $45 for WTI, and there are enough buyers out there each time the market tests those levels," said John Kilduff, partner at New York energy hedge fund Again Capital.

(Additional reporting by Himanshu Ojha in London and Henning Gloystein in Singapore; Editing by William Hardy, Greg Mahlich, Chizu Nomiyama and David Gregorio)