The rally in oil prices towards the $50 mark appeared to fizzle out Tuesday as strength in the US dollar dulled investors’ appetite for commodities.
Crude oil for March delivery fell below $45 as the stronger dollar sent traderslooking at other investments.
Crude had risen above $46 a barrel as perceptions that OPEC countries are complying with production cuts offset continuing concerns over global demand.
OPEC, the oil-producing companies’ cartel, has announced about 4.2m barrels a day in cuts since September.
Consultant Petrologistics said OPEC is expected to have cut 1.5m barrels from daily production between December and January, about 70% of the 2.2m cut announced.
Vienna-based analysts JBC Energy added that compliance appeared to be heading towards 75%.
However, production cuts may not be sufficient to end the bearish trend in oil.
The broker Goldman Sachs said risks to the oil price are to the ‘downside.’
“We believe that it is premature to get long oil and prefer to remain short until inventories stop building and demand weakness subsides,” a group of its analysts said.
