Oil falls with strong dollar, low demand and high stockpile forecasts

By Zeynep Beyza Kilic

Oil prices declined on Tuesday with an increase in the US dollar index and with expectations of low demand amid high US stockpiles.

The international benchmark crude Brent traded at $77.92 per barrel at 11.05 a.m. local time (0805 GMT), a 0.29% decrease from the closing price of $78.15 a barrel in the previous trading session on Monday.

The American benchmark, West Texas Intermediate (WTI), traded at the same time at $72.32 per barrel, down 0.65% from Monday's close of $72.79 per barrel.

The rise in the US dollar against other currencies aided the fall in oil costs. The US dollar index, which measures the US dollar's value against other currencies, increased 0.53% to 102.695. The strong dollar is expected to lower demand by making oil more expensive for users of foreign currencies.

Expectations of a drop in oil production in the US, the world's largest oil-consuming country, due to cold weather gained strength. Harsh weather conditions could stall refinery operations and consequently raise prices amid dwindling supplies.

Experts are awaiting the release of crude oil stock data from the American Petroleum Institute (API) and official data from the Energy Information Administration this week.

API data last week showed that US stocks decreased by 5.2 million barrels, signaling a rise in crude demand. However, a combination of low demand and a build in inventories this week could curb this upward price trend.

Increasing tension in the Middle East, where the majority of global oil resources are located, and disruptions to shipments in the Red Sea, one of the world's most frequently used sea routes for oil and fuel shipments, are putting supplies at risk and bolstering prices.

Last week, US and British warplanes attacked the Yemeni cities of Sanaa, Hudaydah and Taiz in retaliation for Houthis' attacks on international shipping lanes in the Red Sea.

In response to US and UK airstrikes, Yemeni Houthis announced Monday that they had targeted a US-owned ship with naval rockets off the Yemeni coast. In a statement, the group's spokesman, Yahya Saree, said the attack took place in the Gulf of Aden, claiming the strike was "accurate and direct."