By Virginia Harrison, MarketWatch
SYDNEY(MarketWatch) — Benchmark crude-oil futures dipped in electronic trading Tuesday, weighed by a stronger dollar, as traders eyed the progress of the release of global oil reserves mandated by the International Energy Agency.
Crude for August delivery CL1Q -0.08% shed 10 cents, or 0.1%, to $94.84 a barrel on the New York Mercantile Exchange during Asian trading hours.
London-traded Brent crude also declined, with the contract for August delivery falling 21 cents, or 0.2%, to $111.24 on the ICE Futures during Asian trading hours.
Click to Play
Budget cuts slow Mississippi dredging
Historic flooding this year brought tons of silt downriver to the lower Mississippi. But the Army Corps of Engineers lacks adequate funding to do the dredging necessary to keep the waterway clear for shipping.
“Trading is cautious, but we can’t really judge the sentiment since the U.S market is closed,” said Chung Yang, and oil analyst with Phillip Futures in Singapore.
Oil prices have lost more than 5% in the past month, with the decision by the IEA to release 60 million barrels to offset Libyan supply shortages among the factors dampening investment.
The U.S. Department of Energy said last week it has received more than 90 bids for the 30.2 million barrels it is scheduled to release under the IEA plan, and expects the contract process to be completed by July 11.
“In the coming week, we are monitoring the progress of IEA stock release. There are some concerns there is a lack of coordination and transparency outside the U.S., and the 60 million barrels that the IEA decided to release may not be absorbed by the market, due to the weak recovery,” Chung said.
“There are concerns the [release] may create an oversupply situation in the market,” he said.
Oil’s losses came as the greenback gained against the euro in Asian trading Tuesday, with investors wary about European sovereign-debt issues.
The dollar index DXY +0.43% which measures the greenback against six major currencies, traded at 74.481, up from 74.277 in European trading hours on Monday, when U.S. markets were closed for the Independence Day holiday. Read more about currencies.
A stronger greenback tends to discourage investment in dollar-priced commodities such as crude.
Virginia Harrison is a MarketWatch reporter based in Sydney.
