Oil firms as dollar falls further

SINGAPORE, Jan 26 (Reuters): Oil prices reversed earlier falls on Friday as ongoing weakness in the US dollar was seen supporting fuel consumption.
Brent crude futures were at $70.40 per barrel at 0756 GMT, down 3.0 cents from their last close, after dropping as low as $70.07 earlier in the day.
US West Texas Intermediate (WTI) crude futures were at $65.52 a barrel, up 1.0 cent from their previous close, recovering from a session-low of $64.91 a barrel.
Crude oil futures have received support from a weakening dollar, which on Friday hit fresh 2014 lows against a basket of other leading currencies.
As oil is traded in dollars, swings in the greenback can also impact oil demand as it affects the price of fuel purchases for countries using other currencies.
"The weakening of the US dollar against a basket of global currencies ... has positioned 2018 to lead off with strong levels of oil demand," said BMI Research.
Despite this, crude prices were prevented from further rises by a seasonally weakening demand outlook.
Many refiners shut down after winter for maintenance, resulting in lower orders for crude, their most important feedstock.
Output has grown by more than 17 per cent since mid-2016 and is now on par with top exporter Saudi Arabia's.
Only Russia produces more, averaging 10.98 million bpd in 2017.
Rising US output threatens to undermine the supply restraint led by the Organisation of the Petroleum Exporting Countries (OPEC) and Russia, aimed at propping up prices.
The cuts, coupled with demand growth, have contributed to a near 60 per cent rise in oil prices since mid-2017 as excess crude inventories have been drawn down.
Another report from Beijing adds: China's state planner said on Friday it will launch a fresh crackdown on oil refiners that expand capacity without official approval, the latest sweeping move by Beijing to curb unfettered growth in fuel output and illicit oil trade.
In a statement, the National Development & Reform Commission (NDRC) said it will close refineries with less than 2.0 million tonnes per year (40,000 barrels per day) of capacity if they are found to violate regulations.
The penalty for larger refineries will be to curb any expansion projects.
In general, there is illegal behaviour in capacity building, safety, environmental protection and taxation, the NDRC said.