Oil dips below $69 on stronger dollar

Oil dips below $69 on stronger dollar

Tokyo: US crude futures fell as much as $1 to below $69 a barrel in electronic trade on Monday, extending declines into a ninth day, hurt by worries over high oil inventories and a stronger dollar.

The downside has been driven by a rally in the US dollar, after data showed higher-than-expected USretail sales in November.

A stronger dollar prompts investors to sell off commodity positions and tends to pressure crude prices.

NYMEX crude for January delivery was down 54 cents at $69.33 barrel by 0100 GMT, after falling as much as $1.01 to $68.86 earlier. On Friday, it settled down 67 cents, marking an eighth straight session of losses from above $78 a barrel.

Concerns about a sluggish recovery in global fuel demand, along with high fuel stockpiles in the US, have pressured crude prices.

NYMEX crude is up 56 percent so far this year, but still less than half its July 2008 peak of more than $147 a barrel.

Oil storage capacity at Cushing, Oklahoma, the primary US crude delivery point, has expanded by 5.2 million barrels this year, cutting the risk that a shortage of tanks could cause oil prices to plunge.

Japanese stocks were down slightly on Monday, despite a Bank of Japan survey showing Japanese business confidence edged up more than expected in the three months to December.

The Organization of the Petroleum Exporting Countries prepares to meet on 22 December. Many members, including Saudi Arabia, have said the group was likely to hold its output targets steady.

The recent drop in the price of oil will not affect Opec’s inclination to keep its production target unchanged, Kuwait’s oil minister said on Sunday.

Separately, Iraq, emerging from the shadows of war, expects to boost its oil output to rival the level of top producer Saudi Arabia after awarding some of its most attractive oilfields to global energy companies this week.

At the end of a two-day bidding round for 10 oil contracts -- the second auction since the 2003 US invasion -- Baghdad had received pledges from oil firms to boost output by 4.765 million barrels per day, almost double Iraq’s current output.