Oil ticks lower as dollar firms

LOS ANGELES (MarketWatch) � Crude-oil futures extended their losses modestly in electronic trade Tuesday during East Asian hours, tracking further gains for the U.S. dollar amid a revival of European debt concerns.

New York-traded March crude-oil futures CLH3 �gave up another 7 cents, or 0.1%, to trade at $96.10 a barrel, putting icing on a $1.60 drop during the regular New York Mercantile Exchange session.

Likewise, March futures for rival London-traded benchmark Brent North Sea crude UK:LCOH3 �fell further, losing 40 cents, or 0.3%, to $115.20 a barrel after a $1.15 retreat Monday.

Monday�s losses tracked a rally in the U.S. dollar amid a political- corruption scandal in Spain, with additional support coming from reports that the U.S. and Iran may open talks over the latter�s nuclear program. Read: Oil settles lower after last week�s rally

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The strong-dollar component of Monday�s trading environment remained in place early Tuesday, with the ICE dollar index DXY �extending its climb to 79.692 from late Monday�s 79.547.

A rising U.S. unit can damp demand for dollar-denominated commodities as it makes them more expensive for holders of other currencies.

Turning point?

Analysts at Citi Futures, who have been bearish on oil recently due to what they see as a well-supplied global market, remained unsure whether Monday�s losses marked a turning point for crude.

Oil has climbed more or less steadily since its recent lows in early December, when it traded below $86.

�While a further correction in equity markets and rising U.S. crude-oil stocks will test market sentiment, we think it will take some time to see if it proves sufficient to reverse what has been a seven-week cycle of long accumulation by money managers,� they wrote late Monday.

The American Petroleum Institute�s weekly U.S. crude inventory report was due out at 4:30 p.m. Eastern time, with the more influential U.S. Energy Information Administration report slated for the following day.

Elsewhere in the energy complex, heating oil for March delivery HOH3 �sat little changed at $3.15 a gallon, with March gasoline RBH3 �also treading water at $3.01 a gallon.

March natural NGH13 �meanwhile, extended Monday�s 1-cent gain on the Nymex by another penny in electronic trade to sell for $3.33 per million British thermal units.