Oil prices were down in Asia today due to strengthening of the dollar and amid market speculation that Saudi Arabian crude production could increase in the coming months, analysts said.
New York’s main contract, light sweet crude for delivery in April, shed 57 cents to $94.65 a barrel and Brent North Sea crude for delivery in April dropped 61 cents to $114.99.
The retreat in oil prices was driven by “prospects of increasing supply out of Saudi Arabia in the coming months,” Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at Ernst & Young, said.
Market chatter suggested that Saudi Arabia was planning to increase its production to meet the rising demand from countries such as China. An increase in production usually puts a downward pressure on prices.
Another factor was the stronger US dollar, which rose yesterday after the minutes of the latest US Federal Reserve policy meeting were released.
Minutes of the January 29-30 meeting suggested the central bank could begin tightening its monetary policy even before the US labour market picks up.
“Such belief has caused the dollar to rally against the euro, making commodities less desirable,” Phillip Futures said in a market commentary.