Crude futures fell more than $3 a barrel on Tuesday as the North Sea pipeline restarted operations and the dollar gained strength versus the euro.
A labor strike, which started on Sunday at the Grangemouth refinery in Scotland ended today. The refinery provided power and steam to the North Sea Forties pipeline which was affected and had to close, disrupting supplies of 700,000 barrels a day representing about 40 percent of U.K. production.
Although BP Plc informed the Forties pipeline system was restarted the company said it will take several days to restore normal production.
Crude futures for June delivery fell $3.51, or 2.96 percent to $115.24 a barrel on the New York Mercantile Exchange by 1:08 p.m. Prices hit an all time record high on Monday reaching $119.93 a barrel on supply disruptions from the U.K. and Nigeria.
At the same time the dollar rise versus the euro has weighed on crude futures.. The European currency was valued at $1.5560 compared to $1.5640 late Monday.
The U.S. Federal Reserve will probably reduce its interest rate by 0.25 percentage points to 2 percent on Wednesday. Since the Fed began to cut interest rates last summer as a result of the crisis affecting financial and housing markets, crude has jumped 43 percent and the dollar has fallen 12 percent against the euro.
Crude supplies from Nigeria have significantly fallen as Exxon Mobil stopped production due to a strike, however union leaders restarted talks with the company today to put an end to the outage that is entering its sixth day.
In Nigeria, Royal Dutch Shell said militant rebel attacks forced the closing of pipeline which pump 164,000 barrels per day.
A weekly report about U.S. crude inventories will be released tomorrow. Analysts speculate supplies rose 950,000 barrels from 316.1 million barrels the last week according to a Bloomberg survey.
Brent crude fell $3.36 or 2.88 percent to $113.15 a barrel at 1:38 p.m. on the London ICE Futures Exchange.