Oil futures rise on the back of a weaker dollar
London (Mar 30) Oil prices rose on Wednesday, supported by a weaker dollar and industry data showing a smaller-than-expected increase in U.S. oil inventories.
Brent crude LCOK6, +1.33% , the global oil benchmark, rose 1.3% to $40.37 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures CLK6, +1.49% were trading up 1.7% at $38.94 a barrel.
The American Petroleum Institute said inventories last week rose by 2.6 million barrels. The U.S. Energy Information Administration will publish its official data later in the day and analysts surveyed by The Wall Street Journal expect a 3.5 million-barrel increase in U.S. stockpiles.
Oil prices have rebounded in recent weeks since their lows of below $30 a barrel earlier this year on the hope of supply limits by major producers and falling U.S. output. But global oil stockpiles remain near record highs, and U.S. crude inventories are at their highest levels in more than 80 years.
The dollar extended its declines from Tuesday when Federal Reserve Chairwoman Janet Yellen reiterated her cautious stance on the global economy and pointed to a slower path in raising interest rates. As oil is priced in dollars, it becomes more attractive for holders of other currencies when the greenback falls.
On Wednesday, The Wall Street Journal Dollar Index BUXX, -0.41% , which tracks the dollar against a basket of other currencies, fell 0.4%.
Traders will be looking at the EIA’s data later in the session for the latest assessment of supply levels in the U.S.
U.S. oil prices “seem to be entirely ignoring the state of U.S. inventories,” said analysts at consultancy Energy Aspects, adding that a correction in prices can be expected due to the high inventory level.
Along with oil inventories, the EIA will also release its estimate of weekly U.S. output. It has held steady at around 9.1 million barrels a day in recent weeks, down from a peak of 9.7 million barrels a day last April.
Oil’s upswing on Wednesday marked a reprieve from the steady decline in oil prices in recent days. Before Wednesday, WTI shed 7.6% in the prior five sessions as market participants raised doubts about an April 17 meeting of major oil exporters in Qatar.
The countries, including heavyweight suppliers like Saudi Arabia and Russia, are set to discuss a supply freeze at January levels, but actions by Iran and Kuwait have raised questions about those countries’ willingness to participate.
The Taiwanese cargo ship T.S. Taipei is leaking fuel oil into the surrounding waters, posing an environmental threat.
Kuwait’s acting oil minister said on Tuesday that production could restart in the Khafji oil field, which can produce up to 300,000 barrels a day. Jointly operated by state-owned oil companies Kuwait Gulf Oil Co. and Saudi Arabia’s Aramco Gulf Operations Co., it has been closed since October 2014.
Nymex reformulated gasoline blendstock RBJ6, +0.08% — the benchmark gasoline contract — rose 0.1% to $1.48 a gallon. ICE gasoil changed hands at $351 a metric ton, up $9.50 from the previous settlement.
Source: MarketWatch
