Oil falls to US$74, dollar gains

OIL fell below US$74 a barrel yesterday as the dollar strengthened and Tropical Storm Hermine came ashore near the Mexico-Texas border with no signs of disruption to crude or refining output.

The dollar was up 0.6 per cent against a basket of currencies and Hermine's forecast path kept it away from major oil and gas installations in the Gulf of Mexico. A stronger dollar can weigh on oil as it makes crude more expensive for other currency holders.

"There's a quiet week ahead in terms of fundamental news, so keep an ear to equities and the dollar," said Stephen Schork of energy consultants Schork Group, in a report.

US crude fell US$1.22 a barrel to US$73.38 as of 0858 GMT. Brent crude was down 74 cents from Monday's close to US$76.13.

The New York Mercantile Exchange (Nymex), home to US crude futures also known as WTI, will issue one settlement for trades from Sunday, Monday and Tuesday because of Monday's Labor Day holiday.

Brent remained at an atypical premium to US crude because brimming US inventories are weighing on the US benchmark and because of strong values for Brent-related crudes, such as Russia's Urals.

European shares slipped yesterday, with banks down on renewed jitters about the health of the sector. Economic indicators due on Tuesday include US employment trends data at 1400 GMT.

Reuters