The dollar jumped Thursday after President Trump said the greenback should get stronger with the US economy. "Almost every commodity class is being driven up by this extended dollar fall".
U.S. Treasury Secretary Steven Mnuchin had said yesterday during the Davos summit that "a weaker dollar is good for trade", boosting the price of oil and other dollar-denominated commodities.
Oil fell as the dollar rose. "I do think the dollar's accelerated the process of pulling back".
USA crude inventories fell for a record 10th straight week to the lowest since February 2015, according to official figures released yesterday.
Price support has also been coming from supply restrictions led by a group of producers around the Organisation of the Petroleum Exporting Countries (OPEC) and Russian Federation, which started past year and are set to last throughout 2018.
USA crude oil production is expected to surpass 10 million barrels per day (bpd) in February, on the way to a record ahead of previous forecasts, according to the United States government's Energy Information Administration.
Crude sitting in storage at delivery and pricing hub Cushing, Okla. has also fallen in recent weeks, lifting oil prices. Both crude benchmarks are up by nearly 60 per cent since the middle of past year.
Meanwhile, Saudi Arabia's oil minister and Russia's energy minister sounded unconcerned about rising output from USA shale, in remarks this week at the World Economic Forum in Davos, Switzerland.
USA crude stockpiles have been dropping, underscoring the idea that global supply is rebalancing after a glut.
Indeed, earlier this week, OPEC member, Saudi Arabia, said "cooperation" between OPEC and its partners will continue beyond 2018.
But analysts are still anxious about USA shale producers that are quick to increase output when oil prices rise.
Oil production figures released by OPEC on January 18 delivered bad news for Venezuela: from January to December, production fell by 629,000 barrels per day, or 28 percent-a loss virtually unprecedented for a country not experiencing an external shock like war or economic sanctions. PDVSA reported production fell 11.8 percent in December alone.
Stockpiles of fuel also increased last week, with gasoline inventories up 3.1 million barrels and distillates up 600,000 barrels.