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Crude oil futures lower as firm dollar, Cyprus jitters weigh

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Shutterstock photo - Crude oil futures eased down modestly during European morning hours on Tuesday, as concerns over a controversial bailout deal for Cyprus and a broadly stronger U.S. dollar saw investors shun growth-linked assets.

On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD94.06 a barrel during European morning trade, down 0.1% on the day.

New York-traded oil prices held in a range between USD93.97 a barrel, the daily low and a session high of USD94.20 a barrel, which was strongest level since February 25.

Sentiment weakened on Monday following news that a one-time tax was to be imposed on bank deposit holders as part of a EUR10 billion bailout deal for Cyprus.

The agreement marked the first time since the onset of the euro zone debt crisis that depositors have been forced to take a haircut in return for financial aid.

Investor confidence slightly improved however, following reports that the Cypriot government was working on a revised deposit tax proposal, aimed at lessening the impact on smaller depositors ahead of a parliamentary vote later Tuesday.

Oil prices struggled further due to a stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.15% to trade at 83.00.

Oil traders awaited fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world's largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday's government report could show crude stockpiles rose by 2.3 million barrels.

Market players also looked ahead to the Federal Reserve's two-day policy meeting due to begin later in the day, as investors try to assess the central bank's attitude towards monetary stimulus.

Data on Friday showed that U.S. inflation was contained in February, leaving the way clear for the central bank to continue its bond-buying program.

The U.S. is the world's biggest oil consuming country, responsible for almost 22% of global oil demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery lost 0.4% to trade at USD109.06 a barrel, with the spread between the Brent and crude contracts standing at USD15.00 a barrel, the narrowest differential since mid-January. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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