Oil prices traded in red territory on Thursday, extending previous session losses as the dollar continues to rise across the board, getting close to a one-week high against major rivals.
The US dollar index, which measures the greenback against six major currencies, was trading 0.25 percent higher at 90.14 by the time of this writing.
Crude benchmarks are denominated in US dollars. A stronger greenback makes contracts more expensive for investors holding foreign currencies, dampening interest on the commodity.
The US West Texas Intermediate crude contracts were down 1.10 percent to $61.00 per barrel as of 07:30 GMT. Meanwhile, Brent futures eased 0.87 percent to $64.85 a barrel.
The dollar’s dynamic is currently one of the main factors weighing on energy prices. Its effect is so powerful that even an estimated reduction in crude supplies was not able to offer support.
Overnight, the American Petroleum Institute reported an unexpected drop in US crude stockpiles by 907,000 barrels for the week ended February 16 to 420.3 million barrels.
Market analysts are expecting US producers to increase their output in the near term, especially after Baker Hughes’ oil rig count showed last week an uptick of 51 rigs to 798.
Many investors feel worried about growing output in the US as it could threaten output cuts promoted by the Organization of the Petroleum Exporting Countries and Russia.
Ahead in the day, traders await official inventories by the US Energy Information Administration as of 16:00 GMT, with economists forecasting a 1.795 million-barrel build.