Investing.com - Brent oil futures fell to the lowest level in more than two weeks on Tuesday, as a firmer dollar weighed on the commodities complex.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, hit highs of 11-year highs of 98.18 on Tuesday.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.
Demand for the dollar continued to be underpinned after the latest U.S. jobs report solidified expectations for higher interest rates.
The Fed is expected to begin raising interest rates around the middle of this year and investors were looking ahead to next week’s policy statement to see if it would drop its reference to being patient before raising rates.
On the ICE Futures Exchange in London, Brent oil for April delivery hit an intraday low of $57.90 a barrel, a level not seen since February 19, before trading at $58.05 during European morning hours, down 48 cents, or 0.83%.
On Monday, London-traded Brent prices tumbled $1.20, or 2.01%, to settle at $58.53 a barrel as investors focused on a surplus in global supplies.
Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in April dipped 34 cents, or 0.67%, to trade at $49.67 a barrel.
A day earlier, Nymex oil prices ticked up 39 cents, or 0.79%, to end at $50.00 a barrel after data from industry research group Genscape showed a smaller than expected build at the Cushing, Oklahoma delivery point last week.
Market participants now looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of 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 4.2 million barrels in the week ended March 6.
Total U.S. crude oil inventories stood at 444.4 million barrels as of last week, the most in at least 80 years, indicating that cheap prices have yet to affect output.
Industry research group Baker Hughes (NYSE:BHI) said Friday that the number of rigs drilling for oil in the U.S. fell by 63 last week to 923, the lowest since June 2011.
Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.
Oil prices have fallen sharply in recent months as OPEC resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.
The spread between the Brent and the WTI crude contracts stood at $8.38 a barrel early on Monday, compared to $8.53 by close of trade on Monday.
Elsewhere, government data released earlier showed that Chinese inflation for February picked up to 1.4%, above expectations for 0.9% and up from 0.8% in January.
However, the producer price index fell by a more-than-expected 4.8% last month, underling concerns over the health of the world's second largest economy.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Meanwhile, investors continued to monitor talks surrounding Greek reform proposals between Greece and the Eurogroup of finance ministers.
Greece reportedly agreed to allow experts representing the European Commission, ECB and International Monetary Fund to start work in Athens on Wednesday.
Last month Greece reached a temporary agreement with its lenders to extend its bailout by four months, but must complete a bailout review by April before it can access further financial aid.