LONDON: Oil slipped to $49 a barrel on Wednesday as the dollar strengthened, while an industry report showing a larger-than-expected rise in U.S. crude inventories also pressured prices.
Crude futures settled up more than 2 percent on Tuesday, when the dollar index posted its biggest one-day fall since early October. A weak U.S. unit makes dollar-priced commodities cheaper for buyers holding other currencies.
Brent crude has fallen almost 60 percent since June, but since hitting a near six-year low of $45.19 two weeks ago, it has stabilised in a narrow range just below $50 a barrel.
"The key driver for oil prices in the last few days has been currency fluctuations ... we had seen some weakness in the U.S. dollar which helped support prices overnight," Ric Spooner, chief analyst at CMC Markets in Sydney, said.
"Oil eased a little bit in the Asian time zone, possibly reflecting the fact that the dollar is a little bit stronger."
Brent hit a low of $48.79 on Wednesday and was down 45 cents at $49.15 by 0920 GMT. U.S. crude was at $45.50 a barrel, down 73 cents, after hitting an intraday low of $45.33.
The dollar was up 0.2 percent against a basket of currencies.
Investors are now looking to official U.S. inventory data due later on Wednesday for trading cues.
The American Petroleum Institute said late on Tuesday that U.S. crude inventories surged by 12.7 million barrels last week, triple the volume expected.
"The overall expectation is that global supply is outstripping demand at the moment and so unless we see some really substantial changes to inventory numbers, oil prices are probably not going to move too much," Spooner said.
Growing global supplies, led by the U.S. shale boom, have dragged down oil prices from an average of around $110 a barrel between 2011 and 2013, with the Organization of the Petroleum Exporting Countries declining to cut output as it battles to retain market share.
That has led many forecasters to slash their projections for oil. Barclays and Credit Suisse lowered their estimates for Brent in 2015 to $44 and $58 a barrel respectively.
"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," Barclays analysts said in a note.
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