Oil fell towards $80 on Monday as a firmer dollar, nagging worries over Greece's debt and a surprise interest rate hike by India at the end of last week stoked concern over demand. However, fears of global oversupply are countered by a decline in China's fuel exports in February, implying oil demand may gain on an expected domestic demand jump as factories in the country ramp up work previously stalled by winter weather.
US crude for April delivery, which expires later on Monday, slid for the third-straight session, down 62 cents to $80.07 a barrel at 0736 GMT. It had settled at $80.68 on Friday, which saw its worst percentage loss since February 25, and also marked two consecutive weeks of falls.
London Brent crude for April fell 52 cents to $79.36 a barrel. This month, oil has managed to top $83 four times, but has failed to hold the gains, partly stemming from expectations of oversupply this year. A Reuters poll of 10 oil-tracking analysts and organisations showed the oil market will likely face oversupply of 150,000 barrels per day (bpd).
The US dollar index, measured against a basket of currencies, was up 0.21 percent to around 80.89, above last week's 79.825 low. The index had rallied 1.4 percent late last week as the euro succumbed to fresh worries over Greece and its ability to fund itself without euro zone support.
The euro remained under pressure ahead of a euro zone summit, and was languishing at $1.3518, down from $1.3535 late in New York on Friday, when the single currency had fallen to its lowest in more than two weeks against the dollar. EU leaders seemed at odds over how or whether to offer assistance to Greece setting the scene for a tense summit on March 25-26.
Commodity-linked currencies and those leveraged to global growth such as the Australian and New Zealand dollars were still reeling from last week's unexpected increase in Indian interest rates. A firmer greenback makes oil, priced in dollars, more costly for foreign currency holders.
It also indicates investors shifting away from assets deemed riskier, such as commodities and equities, and into safe-haven bets like US Treasury notes. Gold also fell further on Monday as investors sold into a stronger US dollar. India raised interest rates last Friday from record-lows for the first time since it began cutting in 2008, adding to the gloom, as investors feared the tightening move would curb consumption even as the market is looking to robust economic growth in India and China to lead fuel demand.