Oil retreats from 10-month high as stronger dollar dents rally

Oil declined from a 10-month high as the dollar strengthened, taking the steam out of a recent rally, while investors assessed what impact a potential U.S. stimulus package will have on driving fuel demand higher.

Futures in New York slid 0.9% to trade near $53 a barrel as a stronger dollar reduced the appeal of raw materials like oil that are priced in the currency. President-elect Joe Biden will ask Congress for $1.9 trillion to fund immediate relief for the economy that has been pummeled by the Covid-19 pandemic.

Crude is still set for the 10th weekly increase in eleven weeks, even after prices climbed into overbought territory. Worsening U.S.-China relations, meanwhile, are back in the spotlight after Washington blacklisted deepwater explorer Cnooc Ltd. for involvement in the disputed South China Sea.