Oil prices retreat on strong dollar

Global oil prices dipped Monday as investors took their cue from the rebounding dollar, while digesting another Chinese interest rate cut.

US benchmark West Texas Intermediate (WTI) for June delivery slid 43 cents to $58.96 a barrel.

Brent North Sea crude for June reversed 85 cents to $64.54 per barrel in late afternoon deals in London.

The oil market had soared last week to five-month peaks on news of an unexpected slump in US crude reserves, but turned mixed on Friday as global oversupply worries resurfaced.

"Crude oil prices continued to remain under pressure as the strong US dollar weighed on market sentiment," said analyst Myrto Sokou at the Sucden brokerage on Monday.

The rebounding greenback makes dollar-priced oil more expensive for buyers using weaker currencies, which tends to weigh on demand and price levels.

Traders meanwhile mulled China's latest interest rate cut, which has boosted demand hopes in the world's top energy consumer.

China's central bank on Sunday cut its key rates by 25 basis points -- after two similar moves since November -- as it looks to support the world's number two economy, which grew last year at its slowest pace since 1990.

The move is the latest stimulus by the People's Bank of China, which has also twice this year reduced the amount of cash lenders must keep in reserve.

"The stimulus in the economy from the cuts is positive and is likely to boost demand in the Chinese economy," Michael McCarthy, analyst at trading firm CMC Markets in Sydney, told AFP.

"We expect the trading volume for crude to go up later today and the prices to increase further."

Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at business consultancy firm EY, added that oil prices were also "helped by strong US jobs growth and a lower unemployment rate".

A US Labor Department report Friday showed the economy added 223,000 jobs in April and unemployment fell to a seven-year low of 5.4 percent.

Analysts have said the figures are strong enough to suggest the economy was picking up but not enough that the US Federal Reserve would feel comfortable raising interest rates soon.

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