Strong dollar pushes oil below $82

London: Oil slipped below $82 a barrel yesterday as the dollar strengthened against the euro on worries over Greece's debt problems, and after an industry report suggested exports from the Organisation of Petroleum Exporting Countries (Opec) were rising.

Crude prices tend to fall with a stronger dollar as investors seek the safer haven of the US currency over commodities.

A weaker dollar also makes dollar-denominated commodities less expensive for holders of other currencies.

US light crude for April delivery shed 55 cents to $81.65 a barrel yesterday morning after settling 73 cents down at $82.20 on Thursday. London Brent crude for May fell 60 cents to $80.88.

Oil prices are now near the top of their range over the last 18 months, supported by expectations of steady economic recovery, which are helping Asian stock markets close in on a sixth straight week of gains.

Long money

But the US crude futures contract — also known as WTI — has stabilised over the last 10 days following a month of gains, oscillating within a $3 range from around $80 to $83 and analysts say the market may now see a consolidation.

"Technically, it seems that a retest of the 2010 high of $83.95 on WTI will be delayed," said Edward Meir, senior commodity analyst at brokers MF Global.

"We suspect that the longer it takes for WTI to retest this level, the greater the likelihood is that prices will turn lower."

Meir said non-commercial long positions were at two-month highs, which meant a price fall could be exaggerated:

"This is turn suggests that ‘long money' may decide to pull out in the event of a price stall, leading to much sharper decline than what we have been seeing thus far."

Carsten Fritsch, analyst at Commerzbank in Frankfurt, said oil looked comfortable within a range between $80 and $83 per barrel with little immediate sign of a breakout.

"If the dollar were to strengthen significantly from here, oil prices could drop below $80, but they have been holding up fairly well. Bullish sentiment is still dominant," Fritsch said.

Opec decided this week to keep its oil production targets at current levels but the producer group is actually pumping well above its declared targets, helping keep a lid on prices.

All estimates, including Opec's own data, show compliance has fallen steadily over the last year but the market seems unfazed. Opec is likely to leave its targets unchanged again at its next meeting in October, Kuwaiti Oil Minister Shaikh Ahmad Al Abdullah Al Sabah said.

Evidence of slipping compliance came on Thursday from UK consultancy Oil Movements, which forecast seaborne oil exports by Opec, excluding Angola and Ecuador, will rise by 70,000 barrels per day in the four weeks to April 3.