(Bloomberg) -- Oil held losses near $65 a barrel in early Asian trading after a recent rally ran out of steam amid a stronger dollar, which reduced the appeal of commodities priced in the currency.
Futures in New York ended the session 1.6% lower on Monday after climbing to the highest since October 2018 earlier in the session following an attack on a key Saudi Arabian export crude terminal. A Bloomberg survey is pointing to a third weekly gain in U.S. oil inventories, which may lead to the American crude benchmark falling further after figures are released Wednesday.
Oil has rallied this year amid output cuts from Saudi Arabia and OPEC+ and an improving demand outlook with the rollout of Covid-19 vaccines. Prompt timespreads have firmed in a bullish backwardation structure, helping to unwind bloated inventories built up during the coronavirus pandemic, while investment banks continue to raise their crude price forecasts.
The assault on Saudi Arabia’s Ras Tanura facility was the latest in a series of incidents. Yemen’s Houthi rebels launched a number of attacks on the kingdom last week, while the U.S. has conducted strikes on sites in Syria it said were connected with Iran-backed groups.
U.S. crude stockpiles increased by 3 million barrels last week, according to the median estimate in a Bloomberg survey. Inventories have expanded since mid-February after a cold blast shuttered many American refineries, although some plants have started to return to normal operations.