Investing.com -- Crude oil prices fell sharply on Tuesday amid upward revisions of domestic production in the U.S. and reports that a potential emergency Opec meeting will not convene.
On the New York Mercantile Exchange, WTI crude oil for April delivery dropped 1.39 or 2.77% to $48.62 a barrel. Prices for oil futures fell more than $1.50 a barrel in U.S. afternoon trading, after reaching a daily-high of $50.32 hours earlier.
The continuing slide transpired as the U.S. Energy Information Administration (EIA) revised its forecasts for total domestic oil production from 9.3 million barrels a day to 9.35. The upward revision came one day after the EIA found that shale field production nationwide had reached its lowest level in four years. Expectations of increased fourth quarter production in the Gulf of Mexico should outweigh the production decline in shale fields, the EIA added.
Meanwhile, on the Intercontinental Exchange (ICE), prices for brent oil for April delivery fell 3.32% or 1.96 to 57.12. Prices during U.S. afternoon trading wavered, before rebounding to similar levels from morning trading. When prices for brent futures declined to $56.62 on Tuesday morning, it reached its lowest level since mid-February.
The sharp drops in both WTI and crude underscored a volatile global oil market, where traders have become accustomed to large gains or drops on a daily basis. Oil prices have now moved at least 2% in an up or down direction on 28 trading days in the last six weeks.
In addition, the spread between the international and U.S. benchmark also continues to fall. The spread on Tuesday between brent and WTI edged lower to 8.5. By comparison, the spread reached $13 early last week.
The lower differential accentuates the strength of the U.S. Dollar, which continues to reach record-highs. The U.S. Dollar Index, which measures the strength of the greenback against a basket of six other major currencies, rose 1.00% to 98.60 on Tuesday to reach a level not seen since 2004. A strengthening dollar affects dollar-denominated commodities like crude oil by making it more expensive for holders of other currencies to purchase the commodity.
Oil traders await the release of the EIA's weekly report on domestic inventory levels of crude oil on Wednesday. Inventory levels for WTI crude in the United States have reached 62% capacity, its highest level in 85 years.