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Oil prices give up earlier gains, head lower on stronger dollar

Oil prices give up earlier gains, head lower on stronger dollar

Oil prices reversed course Tuesday, giving up earlier gains and slipping as investors shrugged off global supply concerns and focused on the dollar holding its gains against the euro.
Light, sweet crude for July delivery fell $1.08 to $133.27 a barrel on the New York Mercantile Exchange. Earlier, the contract had bucked the dollar, gaining more than $3 per barrel at times, following an International Energy Agency report that said global demand will continue to rise, especially in China.
But the gains were difficult to sustain in the face of a stronger dollar, analysts said.
The dollar rose on supportive comments by U.S. officials, prompting selling by investors who had bought commodities such as oil as a hedge against inflation. Also, a stronger dollar makes oil more expensive to investors overseas.
"You don't get a lot of ... additional buying when the dollar is strong," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois.