Oil fell by more than a dollar a barrel after gaining a dollar yesterday on news that US inventory levels of crude oil could exceed expectations. Investors also returned to the perceived safety of the US dollar to avoid more volatile commodity assets.
“The strength of the dollar is probably the most important factor driving commodities in general and oil in particular,” said Commerzbank commodities analyst Eugen Weinberg. “Equity markets are down in Asia and Europe and there is a feeling that recent price increases may have been overdone, that despite the economic recovery, the current oil supply and demand situation probably does not justify the recent rise in prices.”
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