Oil prices drop as dollar rises on Greek jitters

World oil prices fell Friday as traders took their direction from the dollar, which rose against the euro on the back of the Greek crisis.

US benchmark West Texas Intermediate for July delivery lost 89 cents to $59.56 a barrel compared with Thursday’s close.

Brent North Sea crude for August shed $1.08 to stand at $63.18 a barrel in London early afternoon deals.

“Prices danced to the tune of the dollar/euro exchange, which has been influenced by the latest Greek developments,” said analysts at London-based oil brokerage PVM.

Greece on Friday insisted a last-ditch deal on its debt was possible and dismissed “terror scenarios” of a default that is looking increasingly likely, as emergency European meetings continue in a bid to break the deadlock.

EU President Donald Tusk has called an emergency summit of the leaders of the 19 eurozone countries in Brussels on Monday after finance ministers failed Thursday to break the five-month deadlock between the anti-austerity government in Athens and its international creditors.

In Friday deals, the European single currency slid to $1.1319, down from $1.1371 late in New York on Thursday, when it had struck a one-month peak at $1.1436.

The stronger greenback makes dollar-denominated commodities like oil more expensive for buyers using weaker currencies.

That tends to cap demand and send prices lower.

The oil market had risen modestly Thursday as dealers reacted to the US Federal Reserve’s decision the previous day to leave its key interest rate unchanged.

The world’s most powerful central bank said it would adopt a cautious and methodical approach to raising them later in the year.

Interest rate adjustments are closely watched by crude investors as an increase also leads to a pick-up in the greenback.

Elsewhere, investors remain concerned that top producer and de-facto leader of the OPEC cartel Saudi Arabia could boost output in an already over-supplied market, analysts said.

The kingdom’s oil minister, Ali al-Naimi, said Thursday it is ready to pump more if demand rises, Bloomberg News reported.

It has 1.5 million to two million barrels a day of spare production capacity, al-Naimi said before a meeting with Russian Energy Minister Alexander Novak on Thursday.

Investors have previously voiced concern over the OPEC cartel’s strategy of maintaining high production levels to squeeze US shale producers out of the market.

The resulting huge global supply glut has been attributed as the main cause for oil prices collapsing by more than 50 percent between June and January.