Oil futures moved sharply lower on Wednesday, pressured by a stronger dollar, a forecast downgrade and the latest U.S. inventory data showing crude supplies rose more than forecast last week.
Crude for March CLH5, -1.86% dropped 80 cents, or 1.7%, to $45.44 a barrel, almost erasing a $1.08 gain from Tuesday. Brent crude for delivery the same month LCOH5, -1.01% gave up 51 cents, or 1%, to $49.09 a barrel.
The losses came after the American Petroleum Institute Tuesday afternoon said crude oil supplies in the U.S. rose 13 million barrels in the last week, a much higher level than the 3.5 million barrels expected by analysts polled by Platts.
A stronger dollar further added pressure on energy prices, with the ICE dollar index DXY, -0.07% gaining 0.2% to 94.24 on Wednesday. Dollar-denominated commodities often fall when the buck rises, as they get more expensive for foreign-currency holders.
Oil prices have shaved off around 50% since the summer, which has triggered several forecast downgrades by investment banks. On Wednesday, Barclays further cut its outlook for both Brent and crude, saying it expects WTI to average $42 a barrel in 2015, down from its Dec. 1 forecast of $66. For Brent, the bank now expects to see $44 in 2015, down from $72 predicted earlier. Barclays said it expects Brent and WTI to rise to $60 and $57 a barrel in 2016, respectively.
“Fundamentals are set to weaken in the first half of the year, dragging prices lower than previously forecast. We assume that OPEC will maintain its position, non-OPEC supply growth will stay firmly in positive territory, and oil consumption will be slow to respond to lower prices,” the analysts said in the report.