Oil prices eased further from $55 a barrel on Monday as fresh gains in the dollar prompted speculative funds to take more profits and as concerns over gasoline supply triggered by a Texas refinery blast faded. US light crude fell 41 cents to $54.43 a barrel, losing part of last Thursday's $1.03 gain. Prices are still about $3 below the all-time peak of $57.60 on March 17.
"The funds have started to liquidate the long positions that they have built over the past week," said Keichi Sano, assistant manager at Sumitomo Corp's commodity business unit.
Speculative funds raised their net length in the US crude oil market slightly last week, still shy of the eight-week high from two weeks ago, but boosted their holdings in gasoline to the highest level in just over a year, US regulatory data showed.
The dollar hit a six-week high against the yen and the euro on Monday on expectations that US interest rates would rise at a faster pace.
It was the dollar's eighth-straight day of gains versus the yen.
US gasoline shed 1.57 cents to $1.5835 a gallon, more than 2 cents below last week's record high after the blast at BP's Texas refinery on Wednesday spurred fears of a gasoline supply crunch when Americans take to the roads this summer.
The explosion, which killed 15 people, damaged an isomerization unit that upgrades the quality of gasoline but left most of the plant's operations unaffected.
BP Chief Executive John Browne said the incident cut no more than 5 percent of gasoline production at the plant, the third-largest in the United States.
A second steep weekly fall in US gasoline inventories last week added to concerns, although stockpiles are still 7.5 percent above the year-ago level, US data showed.
US crude oil stocks rose strongly last week, however, reaching their highest level since July 2002.
With oil prices back below $55 a barrel, Opec's threshold for discussing a second output increase, the cartel looked likely to sit tight for the moment, counting on its initial 500,000-barrel- per-day (bpd) rise in mid-March to cool prices.
"So far I have not gotten any calls from the president and we will wait from now until the next Opec meeting in June," Qatar's Oil Minister Abdullah bin Hamad al-Attiyah said on Sunday.
Venezuelan Energy Minister Rafael Ramirez said at the weekend it was too soon to decide on an additional increase.
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