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Oil Prices Fall from 2016 Highs on Stronger Dollar | ASHARQ AL-AWSAT English Archive 2005 -2017
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A worker looks at a pump jack at an oil field Buzovyazovskoye owned by Bashneft company north from Ufa, Bashkortostan, Russia, July 11, 2015. REUTERS/SERGEI KARPUKHIN/FILE PHOTO

Oil prices eased on Friday as a stronger dollar drew crude off the 2016 highs hit this week, although strong refinery demand and global supply disruptions lent support.

Brent oil futures were trading at $51.34 per barrel at 1308 GMT, down 61 cents while U.S. West Texas Intermediate (WTI) futures were down 64 cents at $49.92 a barrel.

According to analysts, a rebound in the dollar had dented oil prices by making fuel imports for countries using other currencies more expensive.

The dollar index was up 0.30 percent, adding to Thursday’s gains as jittery global financial markets sent investors towards safe haven currencies.

ANZ bank said on Friday that oil prices eased back from a near 12-month high as the dollar reversed its recent trend, adding that supply disruptions around the world should help to keep prices from plunging deeper.

Crude prices have almost doubled since touching their lowest in more than a decade in early 2016 as strong demand and supply disruptions erode a surplus that pulled down prices by as much as 70 percent from a mid-2014 peak.

Declines in U.S. shale oil output are being compounded by steep falls in Nigerian production due to attacks by militants and in Canada due to forest fires.

The U.S. government said on Thursday unplanned global oil supply disruptions averaged more than 3.6 million bpd in May, the highest monthly level recorded since it started tracking disruptions in January 2011.

On the demand side, global refining activity is expected to hit a record high just as crude supply disruptions around the world tighten the market.

Available global refining capacity will reach 101.8 million bpd in August, its highest on record, and up from around 97.25 million bpd in March, data on Thomson Reuters Eikon shows.

Investment bank Jefferies said on Friday that U.S. refinery utilization reached 90.9 percent in the first week of June.

Traders say this means that producers need to pump every barrel of crude they can to meet refinery demand, and that the supply disruptions around the world will tighten the market and eat into inventories.

Consultancy JBC Energy said it had increased its 2016 oil demand growth outlook to above 1.4 million barrels per day, largely on increased U.S. gasoline consumption.

On the downside, strikes over labor reforms in France have disrupted key refiners and ports in the past weeks with trade unions saying on Friday protests would continue despite the start of the Euro 2016 football tournament.

Last week, up to 40 per cent of France’s petrol pumps run dry as unions ratchet up pressure on the government to scrap a controversial labor law with mass demonstrations scattering around the country.