© Reuters.

Investing.com– Oil prices fell Thursday, as profit-taking and a stronger dollar weighed, though the prospect of tighter supplies continued to offer support. 

By 14:15 ET (18:15 GMT), the futures traded 0.4% lower at $80.95 a barrel and the contract dropped 0.3% to $85.67 a barrel. 

Profit taking, stronger dollar weigh

Oil’s recent surge to four-month stoked some selling into the strength as prices moved into overbought territory, ING said. 

“The rally in oil has started to fade with the market in overbought territory and little in the way of a fresh catalyst to keep the upward momentum going,” said analysts at ING, in a note.

The dollar, meanwhile, rebounded from a slip on Wednesday following weakness in the pound as the Bank of England delivered a dovish pause. 

The remaining two hawkish monetary policy committee members dropped their call for rate cuts, stoking investors bets that the central bank is likely to cut rates in June, sending the nearly 1% lower. 

Supply outlook remains tight, US inventories shrink

Expectations of tighter oil supplies, which were a key driver of crude gains in the past two weeks, remained largely in play. Official U.S. data showed on Wednesday that crude oil inventories shrank more than expected in the week to March 15.

The draw was driven by increased refinery activity and higher oil exports.

A bigger-than-expected draw in also signaled that fuel demand was picking up from a winter lull.

Adding to recent optimism that supply and demand is coming into balance, the slew of recent Ukrainian drone strikes  has taken out about 12% of Russia’s total oil processing capacity, ANZ Research said, and will likely tighten “the market amid the ongoing cutbacks from OPEC.”

(Ambar Warrick contributed to this article.)