Oil falls on supply glut and strong dollar

Crude oil fell, pressured by ample supply, concerns about demand growth and a stronger US dollar.

Traders pinned much of the fall on the US dollar’s rally to its highest in more than four years against a basket of currencies. The dollar drew support from a fall in US jobless claims and Federal Reserve interest rate forecasts that were higher than those predicted in June.

The decline in the global benchmark Brent price was limited by a drop in Libya’s output and talk of OPEC production cuts. Brent hit a 26-month low after data showing a slowdown in China’s factory output raised demand concerns.

A stronger dollar makes dollar-priced commodities such as oil more expensive for buyers using other currencies.

Brent fell $1.27 to settle at $97.70 a barrel. Prices have declined around 15 percent from a nine-month peak of $115.71 reached in June.

A setback in Libya’s output, which has fallen by about 200,000 barrels per day, has put threats to supply higher on investors’ list of concerns.

US crude fell $1.35 to settle at $93.07 a barrel a day after dropping on government data that showed US crude inventories rose 3.7 million barrels.

Investors were also wary of Thursday’s referendum on independence in Scotland, home to most of Britain’s North Sea oil reserves. Analysts say the result could affect oil prices.