Brent crude fell to $65 per barrel on Monday as the dollar strengthened, that is likely to balance the falling shale output in the US, and concerns about the rising oil prices due to the conflict in Yemen. The dollar rose by 22 percent against other currencies, in turn making crude oil more expensive for holder of other currencies.
Crude futures for delivery in June on the New York Mercantile Exchange, traded at $56.77 a barrel. June Brent crude on London’s ICE Futures exchange dropped to $64.88 a barrel. Nymex West Texas cut off its five-week winning streak as it lost a marginal 0.3 percent last week. However, Brent Crude has been gaining in the last three weeks with 2.9 percent in the last week, rising by 19.8 percent.
“It seems that crude oil prices have come under renewed pressure this morning as U.S dollar rebounded,” said Myrto Sokou, senior analyst at London-based Sucden Financial.
Brent Crude receives support from Saudi Arabia’s military action in Yemen, though US oil prices have come under pressure, after weekly stockpiles rose. Expectations of a possible low US crude output, lifted the prices earlier in the day. According to the oil services firm, Baker Hughes, active U.S rigs have fallen to a record low since 2010, raising expectations of rise in oil prices.
Though Yemen is not among the major oil producers in the region, the Gulf of Eden on Yemen’s southern coast and the narrow straits of Bab-el-Mandeb help gulf producers to ship oil. Deputy oil minister of Saudi Arabia Prince Abdulaziz Bin Salman Bin Adbulaziz stated on Monday that the high oil production was based on the global demand.
A spokesperson for state oil firm NOC in Libya stated that oil output is set to fall as Libyan Security Guards were on a strike over salary payments, forcing the closure of western El Feel oilfield.