RTRS:Brent crude dips below $126 ahead of US oil data
(Reuters) - Brent crude dipped below $126 on Wednesday as expectations for a build in crude inventories and a stronger dollar offset support from improving economic sentiment in the world's top oil consumer.
Brent crude fell 23 cents to $125.99 a barrel by 0727 GMT, after settling at an 11-month high of $126.22 on Tuesday. U.S. crude eased 30 cents to $106.41.
"The U.S. economy seems more buoyant, so that is keeping the market up," said Tony Nunan, a risk manager at Mitsubishi Corp. "What will bring oil prices off is if we get strong builds in inventories. Supply seems to be sufficient, with OPEC producing at high levels to make up for any shortfall."
The government's Energy Information Administration is expected to report later on Wednesday a fourth straight rise in weekly crude oil inventories.
Commercial crude oil stockpiles were forecast to have climbed 1.7 million barrels, according to a Reuters survey of analysts. Gasoline stocks were expected to be down 1.0 million barrels, while distillates to have fallen 1.3 million.
The industry group American Petroleum Industry on Tuesday estimated crude inventories rose 2.8 million barrels in the week to March 9.
A strengthening dollar also pressured Brent crude oil prices, which have rallied more than 17 percent so far this year. Gains in the dollar can pressure dollar-denominated commodities by making them more expensive to consumers using other currencies.
The dollar hit an 11-month high against the yen and a one-month high on the euro on Wednesday, extending its gains after a modest brightening of the Federal Reserve's economic forecasts.
The central bank slightly upgraded its economic outlook on Tuesday, saying it expected "moderate" growth over coming quarters and a gradual decline in the unemployment rate, although it said the jobless rate "remains elevated".
Exporter Saudi Arabia and other Gulf producers warned oil prices could spike higher if tensions between the West and Iran do not subside. The Saudi oil minister said oil markets were generally balanced but stood ready to fill any supply shortfalls.
A majority of Americans would support military action against Iran if there were evidence that Tehran was building nuclear weapons, even if such action led to higher gasoline prices, a Reuters/Ipsos poll showed on Tuesday.
