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UPDATE 6-Oil slips; pressured by strong dollar, stubborn glut

Published 21/05/2016, 05:22 am
© Reuters.  UPDATE 6-Oil slips; pressured by strong dollar, stubborn glut
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* Oil supply exceeds demand by 1.5 mln bpd: Russian minister

* Unplanned supply disruptions amount to 2.5 mln bpd - ANZ

* Oil prices have risen too high, too soon - BNP Paribas (PA:BNPP)

* Coming Up: U.S. oil rig count at about 1 p.m. (1700 GMT) (Adds data on U.S. rig counts, adds settlement prices, details)

By Devika Krishna Kumar

NEW YORK, May 20 (Reuters) - Oil prices slipped on Friday as a stronger dollar encouraged investors to cash in on a second week of gains and the market stayed focused on whether unplanned supply outages were reducing a stubborn global glut.

The U.S. dollar hit its highest level against the yen in more than three weeks and cruised to a third week of gains on mounting expectations for a summer U.S. rate hike. FRX/ USD/ .DXY

A stronger dollar makes greenback-denominated oil futures more expensive for holders of other currencies.

Global benchmark Brent crude LCOc1 settled down 9 cents at $48.72 a barrel, while U.S. crude CLc1 settled down 41 cents at $47.75 per barrel.

Trading was thin ahead of the weekend and the more active WTI contract CLc2 for July delivery settled down 26 cents.

Oil clocked its second straight week of gains, as unplanned supply outages have risen to the highest in at least five years because of wildfires in Canada and losses in Nigeria, Libya and Venezuela. the week, U.S. crude rose 3.3 percent while Brent was up 1.7 percent.

"The overall market sentiment remains biased to the upside as a growing contingency of market participants are of the view that the market is already in a rebalancing pattern and the current round of unscheduled production cuts are starting to accelerate the process," said Dominick Chirichella, senior partner at the Energy Management Institute.

In Nigeria, militant activity has cut oil exports below 1.4 million bpd, the lowest in more than 22 years. Canada, wildfires forced closures of around 1 million bpd, although output is gradually returning. output has been hit by internal conflict. risks are mounting and Venezuela could be the next shoe to drop," said Michael Tran, director of energy strategy at RBC Capital Markets in New York.

Other analysts expect oil prices to come further off recent highs. Prices have risen for six of seven weeks.

"We feel that markets have moved too high, too far, too soon," Harry Tchilinguirian, lead oil and commodities strategist at French bank BNP Paribas in London, told Reuters' Global Oil Forum.

"The combination of a stronger dollar, still excess supply over demand and ongoing overhang of inventories can be expected to put strong downward pressure on prices."

He said oil prices could fall to the mid to high $30 range.

Chances of joint action among OPEC and non-OPEC producers to balance an oversupplied market remained slim.

Russian Energy Minister Alexander Novak said he saw supply in excess of demand of around 1.5 million bpd. oil rig counts were unchanged this week, indicating that a near two-year slump in the rig count could be ending as forecast by several analysts. TAKE A LOOK-World oil gluts persists despite disruptions

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