Investing.com – Crude oil prices settled lower as the dollar rose sharply but losses were limited as traders remained optimistic that OPEC output cuts would continue to rid markets of excess supplies.
On the New York Mercantile Exchange crude futures for March delivery fell 10 cents to settle at $65.51 a barrel, while on London's Intercontinental Exchange, Brent fell 37 cents to trade at $70.16 a barrel.
The dollar reversed its losses for the session after President Donald Trump signalled his support for a stronger dollar and said recent remarks made by Treasury Secretary Steven Mnuchin "were taken out of context.
Dollar-denominated assets such as oil are sensitive to moves in the dollar – a rise in the dollar tends to make oil more expensive for holders of foreign currency and thus, reduces demand.
Despite the negative day for oil prices, investor sentiment remained positive amid recent data showing US crude supplies slumped for the tenth-straight week.
Inventories of U.S. crude fell by roughly 1.071 million barrels for the week ended Jan. 19, beating expectations for of a draw of one million barrels.
US crude output, however, inched closer to an unprecedented 10 million barrels per day after rising to nearly 9.9 million barrels a day last week, the EIA said.
Russia and Saudi energy ministers, Alexander Novak and Khalid al-Falih, both said the markets were too focused on the swings in U.S. shale production, which represented only a modest portion of the global output.