Oil Futures Drop on Oversupply Concerns a Stronger Dollar

On Friday, oil futures lowered on early Asian trade with oversupply worries and strengthening dollar, weighing on the prices. Some support was offered by a data revealing that there was an added drop in U. S. oil output in January.

May U. S. crude futures dropped 18 cents to $38.16 and later settled 2 cents up in the earlier session. The oil benchmark increased four percent between January and March which was its largest quarterly gain noted since June
2015. June delivery Brent crude LCOc1 dropped 19 cents to $40.14 per barrel. The May contract, expiring on Thursday settled 34 cents up at $39.60 per barrel.

On Friday, in early trading, the dollar index DXY increased which marked a rebound from its mid-October low touched in the earlier session.

A stronger U. S dollar makes commodities denominated by the greenback more expensive for holders of other currencies and that includes oil too.

In January, crude oil production in the United States dropped by 56,000 barrels a day to 9.179 million barrels per day revealed a monthly data released by the U. S. Energy Information Administration. According to the EIA data, it was marked the fourth consecutive month of drop in U. S. oil production and also noted the lowest output level since October 2014.