* Canadian wildfires move away from oil sand fields
* Stronger dollar also weighs on oil
* Worries of a refined product glut linger
By Henning Gloystein
SINGAPORE, May 10 (Reuters) - Oil prices fell early on
Tuesday as Canadian wildfires that have knocked out over 1
million barrels worth of daily crude capacity moved away from
production facilities, while brimming inventories and a strong
U.S. dollar weighed on markets.
U.S. crude futures CLc1 were trading at $43.09 per barrel
at 0040 GMT, down 35 cents from their last settlement.
Brent crude was down 26 cents at $43.37 a barrel.
"A reversal in the U.S.-dollar will continue to weigh on
commodity markets. With concerns easing over Canadian oil supply
disruptions, crude oil could come under additional pressure,"
ANZ Bank said.
A stronger dollar, in which oil is traded, makes fuel more
expensive for countries using other currencies, potentially
hitting demand.
The dollar has jumped over 1.5 percent this month after
falling by 7 percent against a basket of other currencies .DXY
between January and April.
Canadian officials who got their first glimpse on Monday of
the oil sands town of Fort McMurray since a wildfire erupted and
knocked out over 1 million barrels of daily crude production
capacity said almost 90 percent of its buildings were saved.
Despite the improving conditions, oil producers expect
shutdowns of several weeks as facilities like pipelines that
were close to the fires need to be inspected, while evacuees
need to leave the production plants before staff can return.
Given that outages in Canada and around the world have
eroded the 1-2 million barrels per day of crude oversupply, some
traders said that a $50 price may resemble a newly balanced
market as long as storage tanks remain as full as they are.
"It seems as if supply and demand have balanced, but there's
still enormous amounts of crude available in storage. With that
in mind, it almost looks like $45 to $50 Brent resembles a
balanced, well stocked market," one trader said.
Traders said they were re-focussing on North America's
brimming crude inventories despite the disruptions from Canada,
which exports most of its crude to the United States.
U.S. commercial crude stockpiles likely rose last week for
the fifth straight week, a Reuters poll showed, with total U.S.
crude inventories seen to have built by 500,000 barrels to new
record highs above 543 million barrels.
With plentiful crude available, refiners have produced large
volumes of gasoline and diesel, threatening to overwhelm demand
despite the upcoming peak summer U.S. driving season.
If that happens, refiners will lower their output and cut
orders for new crude feedstock, putting downward pressure on
prices.