By Barani Krishnan
NEW YORK (Reuters) - Oil prices tumbled on Thursday as U.S. rate hike expectations lifted the dollar, though some of those losses were pared on worries about more supply outages from Nigeria's main crude oil terminal.
An extension of a force majeure by Canada's Suncor Energy that will prevent any more shipping of oil this month from its Syncrude facility also helped crude prices retrace losses.
Growing expectations that the U.S. Federal Reserve may raise rates next month had earlier prompted investors to cash out of long positions in Brent and U.S. crude's West Texas Intermediate (WTI) futures. Those positions made money after oil rallied on Monday and Tuesday on worries about supply outages.
By Thursday afternoon, Brent and WTI were sharply off session lows after the Qua Iboe crude oil terminal, Nigeria's largest which typically exports more than 300,000 barrels per day, was reported closed due to militant threats.
Workers at the terminal, operated by ExxonMobil, have been evacuated and its tanks have been emptied, said the report, citing traders.
An ExxonMobil spokesman later clarified that production was still "ongoing" at the terminal, although business was disrupted earlier on Thursday by "criminal" activity.
"The report on the Nigerian terminal closure was being passed around, and had possibly helped crude prices come off their lows," said Scott Shelton, broker with ICAP in Durham, North Carolina.
The Syncrude project in northern Alberta extended its force majeure following ongoing wildfires that have shut output capacity from the vast oil sands by more than 1 million barrels per day. Traders indicated that cuts ranged as high as 90 percent.
Brent futures' front-month contract, July, was down 46 cents, or 1 percent, at $48.47 a barrel by 1:33 p.m. EDT (1733 GMT). It had fallen as much as $1.55, or more than 3 percent, during the session low, to $47.38.
WTI's June contract, which expires as front-month at Thursday's settlement, was down 40 cents, or 0.8 percent, at $47.79 a barrel. It had fallen to $46.73 earlier.
Oil tumbled in early trade, extending losses from the previous session that followed the release of the Fed's April policy meeting minutes that fed expectations of a June rate hike. On Thursday, New York Fed President William Dudley said the central bank was on track for a June or July rate increase.
The dollar index, measured against a basket of currencies, surged to its highest in nearly two months, making greenback-denominated oil more expensive for holders of the euro and other currencies.
Some analysts say the dollar's potential rally through June or July could limit or even stall the rebound in oil, which has seen Brent rise from January lows of $27 and WTI from February levels of $26.
(Additional reporting by Alex Lawler in LONDON; Editing by Marguerita Choy and Bernadette Baum)
