Oil futures extend losses on stronger dollar, WTI falls below $49

Investing.com - Crude oil futures extended sharp losses from last week on Monday, as a broadly stronger dollar and lingering concerns over a glut in global supplies drove down prices.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tacked on 0.35% to 94.73.

Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.

On the New York Mercantile Exchange, crude oil for delivery in April hit a daily low of $48.68 a barrel, the weakest level since February 5, before trading at 49.34 during U.S. morning hours, down $1.47, or 2.89%.

New York-traded oil futures sank $2.69, or 5.33%, last week, the first weekly loss in four weeks, amid ongoing concerns over a supply glut, especially in the U.S., where inventories are at record highs.

On Friday, Nymex oil dropped $1.02, or 1.97%, to end at $50.81 after data showed that the pace of falling rigs in the U.S. slowed last week.

Industry research group Baker Hughes (NYSE:BHI) said that the number of rigs drilling for oil in the U.S. fell by just 37 last week, the smallest weekly drop this year and compared to a decline of 84 rigs in the preceding week.

The number of rigs drilling for oil in the U.S. totaled 1,019, the lowest since August 2011. The number of oil rigs has declined in 16 of the last 19 weeks since hitting an all-time high of 1,609 in mid-October.

However, government data showed that oil supplies in the U.S. rose to the highest level in at least 80 years last week, indicating that cheap prices have yet to affect output.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for April delivery slumped $1.18, or 1.95%, to trade at $59.05 a barrel, after touching a session low of $58.38 earlier.

The April Brent contract eased up 1 cent, or 0.02%, on Friday to settle at $60.22 a barrel. London-traded Brent declined $1.27, or 2.11%, last week, halting three straight weeks of gains.

Brent prices are up more than 11% in February as some investors bet that a bottom had been reached after a seven-month long rout. But prices are still down approximately 47% since June, when futures climbed near $116.

The spread between the Brent and the WTI crude contracts stood at $9.47 a barrel.

Oil prices have fallen sharply in recent months as the Organization of Petroleum Exporting Countries 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.

Meanwhile, investors remained cautious as Greece was to present a list of reforms on Monday to be approved by the country’s creditors in order to secure its four-month bailout extension, which will give it more time to reach a lasting agreement with its creditors.

On Friday, the euro zone approved the extension of Greece’s €240 billion bailout, removing concerns that the country would face a liquidity crunch when its current bailout agreement expired at the end of the month.