Oil falls from eight-week high

Oil prices slipped back from eight-week highs overnight, pressured by a stronger dollar and uncertainty about an economic recovery.

US crude futures for April fell 13 cents to US$81.74 a barrel by 12:15 pm EST (6.15am NZT), after reaching a low of $80.16 a barrel earlier.

In London, North Sea Brent crude oil futures slipped 24 cents to US$80.23 a barrel.

"The petroleum markets have tipped back to the downside, with crude oil testing the US$80 level from above, on selling prompted by an upturn in the US dollar," said Tim Evans, an energy analyst for Citi Futures Perspective.

The US dollar, which for months has been inversely correlated with oil prices, edged up on Tuesday against a basket of currencies, putting some pressure on oil prices.

A stronger dollar makes dollar-denominated commodities, such as crude oil, more expensive for holders of other currencies.

Expectations for a US crude oil inventory build were also bearish for prices.

A Reuters survey of analysts showed US crude inventories rising for a sixth straight week as imports edged up and refinery utilisation remained flat.

Inventories of both crude oil and refined products in the United States have swelled as the recession has reduced fuel consumption in the world's top consumer of oil.

US crude inventories gained 1.9 million barrels in the week to March 5, the Reuters poll showed, while gasoline stockpiles may have increased by 300,000 barrels.

The industry-funded American Petroleum Institute will publish inventory data on Tuesday at 4:30pm EST (10.30am), followed by government statistics from the Energy Information Administration on Wednesday.

No change to Opec targets

The Organisation of the Petroleum Exporting Countries (Opec) will keep oil production targets on hold when it meets in Vienna on March 17, but could raise output later this year as the world recovers from recession, pushing up demand for fuel, a Reuters poll showed on Monday.

Opec ministers say they are content with oil prices where they are and analysts say they are unlikely to do anything to alter the current trading range between US$70 and US$85 per barrel.

Iran's Opec governor was quoted yesterday as saying the 12-country grouping may not necessarily increase output if oil demand rises, as other producers might boost their production.

- Reuters