Oil price loses steam

Oil declined for a second day yesterday to trade below US$86 as a stronger dollar and soaring US crude stockpiles took the steam out of the year's sharpest rally so far.

Resurgent concern about Greece's fiscal crisis has shaken markets from commodities to equities over the past two days, boosting the value of the US dollar against the euro and other major currencies as investors seek safer assets.

Front-month US crude rallied to an 18-month intraday peak above US$87 on Tuesday after a flurry of positive economic indicators from the world's largest energy user.

The contract climbed almost 9 per cent in six sessions, before changing direction on Wednesday.