SYDNEY (Reuters) - Oil fell for a fourth day on Tuesday, dipping briefly below the $100 mark as a stronger dollar, weaker demand and growing crude oil inventories extended a retreat that has knocked a tenth off prices since last week.
U.S. light crude for May delivery recouped some early losses to stand 60 cents lower at $100.26 a barrel by 3:46 a.m. (British time), a fourth day of losses and sharply down from a record high $111.80 a barrel touched on March 17.
London Brent crude fell $1.01 to $98.85 a barrel.
“There is a realisation in the market that the fundamentals really don’t justify prices to be so far above $100. One of the key factors is the recent build-up in U.S. stockpiles and the stocks are looking pretty healthy at this stage,” said Gerard Burg, a resource analyst at the National Australia Bank.
A lack of supply-side concerns, along with the recovery in the U.S. dollar, have also added downward pressure on oil prices, Burg said.
Analysts said a slowdown in the U.S. economy, combined with a seasonal fall in demand in the second quarter, may drive oil prices below the $100 mark for the coming weeks.
U.S. crude oil stocks likely rose for a third week, climbing 700,000 barrels in the week to March 21, while distillate and gasoline stocks probably fell, according to a preliminary Reuters poll ahead of Wednesday’s government data.
Oil has dropped more than $10 from last week’s record as investors fled commodities on a view that gains had been overdone, giving a lift to the beleaguered dollar in the process.
The U.S. currency extended its recovery from a 13-year low against the yen on Monday and held gains on Tuesday.
Traders said Monday’s losses were tempered somewhat by stronger than expected U.S. homes sales data that lifted Wall Street stocks, and forecasts of unusually cold weather in the U.S. Northeast and European heating markets.
A recovery in the U.S. dollar from recent lows against the euro was pressuring the nominal price of virtually all dollar-denominated commodities, including crude.
Uncertainty over world energy demand growth has kept OPEC from raising production to curb high oil prices, despite calls from consumer nations for additional output.
U.S. Vice President Dick Cheney, who visited Saudi Arabia last week, said on Monday, however, that the OPEC heavyweight had kept its promise to increase oil production capacity over the past three years.
Editing by Ben Tan