Oil drops a second day as dollar rebound cuts demand

Oil fell below US$82 a barrel after the dollar advanced against the euro for a second day amid speculation that Greece may fail to secure financial assistance from the European Union. A stronger U.S. currency limits the incentive for investors to buy commodities priced in dollars as a hedge against inflation. U.S. crude inventories rose last week to the highest since August, the Energy Department said March 17.

“Oil is dropping as these persisting Greek jitters push up the dollar against the euro,” said Andrey Kryuchenkov, an analyst with VTB Capital in London.

Crude oil for April delivery fell as much as 0.8 percent to US$81.51 barrel in electronic trading on the New York Mercantile Exchange. It traded at US$81.60 at 10:10 a.m. London time. Thursday, the contract lost 0.9 percent, ending a two-day climb. Futures are set for a 0.5 percent gain this week.

Brent crude for May settlement on the London-based ICE Futures Europe exchange fell 64 cents to US$80.84 a barrel at 10:10 a.m. local time.

Oil prices may fall next week on rising U.S. supplies and speculation that fuel consumption will decline next month, a Bloomberg News survey showed.

Seventeen of 38 analysts and traders, or 45 percent, said oil will drop through March 26. Twelve respondents, or 32 percent, predicted that futures will climb and nine said there will be little change in prices. Last week, 46 percent of respondents predicted there would be a decline in futures.

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