Oil prices slipped on Friday in thin Asian trade ahead of the Christmas and New Year holidays, eroding some of the gains in the previous session as traders took profits.
Brent crude for February delivery LCOc1 dropped 19 cents, or 0.4 percent, to $54.86 a barrel as of 0755 GMT after ending 1.1 percent higher on Thursday reported reuters.
U.S. West Texas Intermediate crude CLc1 fell 28 cents, or 0.5 percent, to $52.67 a barrel after gaining 0.9 percent in the previous session.
“There’s some profit-taking after the last session’s gains. Oil prices are also weaker due to the stronger dollar,” said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney.
“But overall, the fact the dollar and commodities are soaring either tells you demand for commodities has picked up or there is a need for more supply.”
The dollar index .DXY steadied on Friday, but not far below a 14-year peak of 103.65 reached earlier this week.
A firmer dollar makes greenback-denominated commodities including oil more expensive for holders of other currencies.
Oil prices are trading around their highest levels since mid-2015, supported by a deal by the Organization of the Petroleum Exporting Countries and non-OPEC oil producers to cut output by almost 1.8 million bpd from Jan. 1.
Barratt expects U.S. crude to trade around $60 a barrel in the first quarter next year, with Brent around $62-$63.
The production cuts will coincide with the first sale in January of U.S. crude from the country’s strategic petroleum reserve, New York-based tanker and energy consultancy Poten & Partners said in a note on Thursday.
“If all planned sales go ahead, the U.S. SPR could be reduced by some 190 million barrels between 2017 and 2025,” the note said. The current inventory is around 695 million barrels.
Although volumes were small, the “U.S. government is adding oil to the market at the same time that OPEC is trying to remove it,” Poten said.