Oil slips towards $84 on strong US forecast

London: Oil fell towards $84 yesterday, weighed down by a slightly stronger dollar and ahead of expected news of a rise in US crude stockpiles.

The dollar touched a six-week high against the euro as investors cut exposure to commodities and risk and as anticipation of the Federal Reserve's $600 billion (Dh2.2 billion) bond programme pushed up US Treasury yields.

Concerns over the health of the Irish economy also weighed on the euro.

US crude for December slipped 77 cents to $84.09 a barrel by 0958 GMT, extending losses from the previous session. ICE Brent fell 60 cents to $86.16.

Edward Meir, senior commodity analyst at brokers MF Global in Connecticut, said he expected markets to keep a wary eye on Ireland and on China, which has been tightening monetary policy.

"Prices [are likely to] remain slightly on the defensive, as investors head for the relative safety of the dollar while waiting for developments in Ireland and China to unfold," Meir said. Analysts expect Crude stockpiles in the US rising 400,000 barrels, while distillates were expected to fall 1.6 million barrels, a Reuters poll showed.

Crude has fallen nearly 5 per cent since hitting a 25-month peak of $88.63 last week. The sell-off was sparked by fears that China may raise interest rates.

The dollar has rebounded strongly over the last two weeks as the impact of the Federal Reserve's quantitative easing has pushed up US bond yields.

Gold steady

Gold steadied yesterday but remained near its lowest in nearly two weeks as a stronger dollar kept commodities under pressure, partially offsetting the lift to bullion from concern over the Irish debt crisis.

Spot gold traded at $1,361.90 an ounce by 1005 GMT, after falling to $1,354.99 in the previous session, its lowest in nearly two weeks. US gold futures fell 0.5 per cent to $1,361.6 an ounce.