Oil fell 4% to below $68 a barrel today, reversing some of the previous day’s steep surge, after Barack Obama’s victory in the US presidential election boosted the dollar.
Markets had rallied sharply on Tuesday, partly on anticipation of the victory, which some analysts said should help extend the US dollar’s recovery.
“Prices have slipped back overnight as we were overdone on the upside yesterday, and we’re seeing a stronger dollar on the back of the Obama victory,” Rob Laughlin of MF Globa told Reutersl.
US crude fell $2.91 to $67.62 a barrel by 0853 GMT. London Brent crude lost $2.94 to $63.50.
The dollar – which posted its biggest one-day slide against the euro since that currency’s 1999 launch on Tuesday – rebounded against major currencies today, rising more than 1% against the euro.
Oil traders’ focus later in the day is likely to turn to weekly US oil inventories, with crude oil stocks expected to rise by 1.1 million barrels last week.
Crude prices have fallen by about half from a record high of $147.27 a barrel in July as the global credit crisis hit the wider economy, dampening fuel demand in major consumer nations.
Oil had surged $6.62 or 10.36% today, the largest one-day gain since 22 September, on signs that Saudi Arabia and other Opec members had made cuts in oil exports.
Saudi Arabia has reduced exports after Opec agreed last month to lower output, according to trade sources.