NEW YORK (Reuters) - Oil prices fell 1 percent on Wednesday, snapping a string of six straight sessions of gains, pressured by a stronger dollar and U.S. government data showing a bigger-than-expected increase in crude inventories.
U.S. light crude futures for May fell 96 cents, or 1.1 percent, to settle at $85.88 a barrel. An intraday low of $85.52 was posted in post-settlement trading as the U.S. stock market dropped to a session low late.
On Tuesday, U.S. crude reached an intraday peak of $87.09, its highest since October 2008.
On Wednesday, London ICE Brent fell 56 cents, or 0.65 percent, to settle at $85.59 a barrel.
“Overall, it appears that this energy rally may have about run its course ...,” Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note.
“The dollar appears poised for new highs against the euro, the stock market is beginning to stall, and we see absolutely nothing bullish about the oil fundamentals,”
The dollar was up around 0.2 percent against a basket of currencies .DXY as the euro fell to a one-week low against the dollar amid concerns about Greece’s debt crisis.
Oil and commodities often move inversely to the dollar as they are priced in the U.S. currency on international markets.
Technical charts also indicated that oil might be due for consolidation after a rise of around 9 percent in seven trading days leaving the 14-day relative-strength indexes (RSIs) close to 70, suggesting markets were modestly overbought.
U.S. crude oil inventories rose for a 10th straight week, lifting stocks to the highest level since mid-June 2009, the U.S. Energy Information Administration said on Wednesday.
Crude inventories rose by 2 million barrels to 356.2 million barrels in the week to April 2, the highest since supply hit 357.7 million barrels in the week to June 12, 2009, according to EIA data.
The EIA’s report had a bigger build than Tuesday’s data from the American Petroleum Institute trade group, which reported crude oil stocks rose 1.1 million barrels.
Gasoline stocks fell to 222.4 million barrels, a drop of 2.5 million barrels, the EIA said. The forecast was for a drawdown of 800,000 barrels.
Distillates, including heating oil and diesel, snapped a series of declines, rising 1.1 million barrels to 145.7 million barrels. The forecast was for a drop of 1.2 million barrels.
Global stock markets weakened on concerns about Greece’s financial woes. U.S. stocks fell in a late-day drop. .N Comments from a Federal Reserve official, saying interest rates should not stay low for much longer, sparked caution.
Crude did bounce off lows intraday, with some sources citing geopolitical developments. China hinted it might be ready to allow the yuan to rise.
“The contango is almost completely out of the crude curve. And with geopolitics kind of heating up again and the Chinese looking to revalue the yuan somewhat higher, I think that’s what is really driving the crude complex,” said Mark Kellstrom, senior analyst at Strategic Energy and Capital in Summit, New Jersey.
Iran has its nuclear program dispute with the West. Industry sources said that Russian oil company LUKOIL (LKOH.MM) will stop supplying gasoline to Iran, another company to halt shipments ahead of possible sanctions.
Additional reporting by Gene Ramos in New York and Christopher Johnson in London; Editing by David Gregorio