Brent, US Crude Slip On Dollar Strength, Ample Supply

Reuters

NEW YORK, June 2 (Reuters) - Brent and U.S. crude oil futures fell in choppy trading on Monday, weighed on by a stronger dollar and recent data showing rising OPEC oil production.

Brent July crude fell 58 cents to settle at $108.83 a barrel, after hitting $109.87 and then pulling back below Brent's 200-day moving average at $109.07.

U.S. July crude, also known by its West Texas Intermediate benchmark, fell 24 cents to settle at $102.47 a barrel, ending lower after touching $103.35 intraday.

The market earlier shrugged off a report from industry intelligence company Genscape that TransCanada Corp's Keystone Gulf Coast crude oil pipeline was shut and later news that TransCanada said it was conducting maintenance on the pipeline until Wednesday.

"Crude futures are seesawing and seem to be trying to find the next driver, while reports of rising exports from (OPEC members) Iraq and Iran and the ongoing strong U.S. production are weighing on the market," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Iraq's oil exports rose by 8 percent in May, and a terminal was inaugurated that will expand shipping capacity by 800,000 barrels per day, the Oil Ministry said on Sunday.

OPEC's oil output last month rose to a three-month high, a Reuters survey found on Friday, as increased supplies from Angola and a rise in exports from southern Iraq outweighed problems in Libya.

The dollar rose against the euro on Monday as subdued inflation readings in Germany and slower than expected manufacturing growth in the euro zone put pressure on the European Central Bank to ease monetary policy.

A stronger dollar tends to put pressure on commodities including oil, which are priced in the U.S. currency as it makes them more expensive for non-U.S. importers.

Brent is seen likely to fall toward $108.43 after breaking through a support level at $109.41 a barrel, while U.S. crude is expected to end its rebound and drop to support at $102.30, according to Reuters technical analyst Wang Tao.

China Data Supportive

Brent and U.S. crude rose in early trading after data showing that China's factory activity expanded in May at its quickest pace in five months.

China's official Purchasing Managers' Index rose to 50.8 in May from April's 50.4, the National Bureau of Statistics said on Sunday, beating market expectations for 50.6.

"Anything over 50 is good news and is supportive of prices, but this ... is not a bolt from the blue so, to some extent is priced in," said Gareth Lewis-Davies, senior energy analyst at BNP Paribas.

(Additional reporting by Lin Noueihed in London and Manash Goswami in Singapore; Editing by G Crosse, Dale Hudson, Jane Baird and Peter Galloway)

Copyright 2014 Thomson Reuters.



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