Investing.com - Crude oil futures erased gains on Tuesday, after strong U.S. retail sales data further diminished expectations for a third round of U.S. monetary easing, boosting the U.S. dollar ahead of the outcome of the Federal Reserve’s policy meeting later in the day.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD106.16 a barrel during U.S. morning trade, dipping 0.17%.
It earlier rose by as much as 0.65% to trade at a daily high of USD107.13 a barrel.
Official data showed that U.S. retail sales rose to the highest level in five months in February, increasing by a seasonally adjusted 1.1%, in line with expectations.
Core retail sales, which exclude automobile sales, rose by 0.9% last month, above expectations for a 0.8% gain.
Rising retail sales over time correlate with stronger economic growth, which translates into higher energy demand.
While the upbeat U.S. retail sales would have normally boosted oil prices, traders unwound long positions as the data further dampened expectations for a third round of monetary stimulus by the Fed.
Traders now shifted their attention to the outcome of a Federal Reserve policy meeting later in the day.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.45% to trade at 80.65, the highest since January 19.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Oil prices were higher during Asian and European trading hours as market sentiment improved after euro zone finance ministers said that Greece would receive formal approval for its second bailout later this week.
Data showing that German economic sentiment improved to the highest level since June 2010 this month further supported appetite for riskier assets.
Meanwhile, markets were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 2.0 million barrels last week, while gasoline inventories are expected to decline by 1.0 million barrels.
Losses were limited as market participants continued to monitor tensions between Iran and the West surrounding the Islamic Republic’s nuclear program.
The West is expected to reinforce its tough stance against Iran's nuclear program this week when U.S. President Barack Obama and British Prime Minister David Cameron meet.
The stand-off between Iran and Western countries surrounding the Islamic Republic’s nuclear program has dominated sentiment in the oil market for weeks.
Growing tensions between Iran and Israel also remain in focus. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.
Iran produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the OPEC, after Saudi Arabia.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery was up 0.3% to trade at 125.11 a barrel, with the spread between the Brent and crude contracts standing at USD18.95.
Angolan Oil Minister Jose Maria Botelho de Vasconcelos told reporters at the International Energy Forum in Kuwait earlier that international politics are pushing up the price of oil, and that the African nation would prefer to see Brent at USD110 to USD115 a barrel.
The IEF is a gathering of energy officials and companies from producing and consuming countries that takes place every two years.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD106.16 a barrel during U.S. morning trade, dipping 0.17%.
It earlier rose by as much as 0.65% to trade at a daily high of USD107.13 a barrel.
Official data showed that U.S. retail sales rose to the highest level in five months in February, increasing by a seasonally adjusted 1.1%, in line with expectations.
Core retail sales, which exclude automobile sales, rose by 0.9% last month, above expectations for a 0.8% gain.
Rising retail sales over time correlate with stronger economic growth, which translates into higher energy demand.
While the upbeat U.S. retail sales would have normally boosted oil prices, traders unwound long positions as the data further dampened expectations for a third round of monetary stimulus by the Fed.
Traders now shifted their attention to the outcome of a Federal Reserve policy meeting later in the day.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.45% to trade at 80.65, the highest since January 19.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Oil prices were higher during Asian and European trading hours as market sentiment improved after euro zone finance ministers said that Greece would receive formal approval for its second bailout later this week.
Data showing that German economic sentiment improved to the highest level since June 2010 this month further supported appetite for riskier assets.
Meanwhile, markets were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 2.0 million barrels last week, while gasoline inventories are expected to decline by 1.0 million barrels.
Losses were limited as market participants continued to monitor tensions between Iran and the West surrounding the Islamic Republic’s nuclear program.
The West is expected to reinforce its tough stance against Iran's nuclear program this week when U.S. President Barack Obama and British Prime Minister David Cameron meet.
The stand-off between Iran and Western countries surrounding the Islamic Republic’s nuclear program has dominated sentiment in the oil market for weeks.
Growing tensions between Iran and Israel also remain in focus. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.
Iran produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the OPEC, after Saudi Arabia.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery was up 0.3% to trade at 125.11 a barrel, with the spread between the Brent and crude contracts standing at USD18.95.
Angolan Oil Minister Jose Maria Botelho de Vasconcelos told reporters at the International Energy Forum in Kuwait earlier that international politics are pushing up the price of oil, and that the African nation would prefer to see Brent at USD110 to USD115 a barrel.
The IEF is a gathering of energy officials and companies from producing and consuming countries that takes place every two years.