Oil prices reached one-month highs on Tuesday as the dollar fell, making commodities priced in the US currency more attractive, allowing investors to pay less for dollar-denominated oil using other currencies.
Expectations for a fall in crude inventories in the United States, the world’s biggest consumer, also boosted global oil prices, though rising coronavirus cases in Asia capped gains.
Brent crude futures for June delivery rose by more than 1%, hitting a session high of over $68 a barrel at 09:15 GMT. US West Texas Intermediate (WTI) crude futures for May delivery, which expire on Tuesday, were also up over 1%, trading above $64 per barrel.
“US dollar weakness continues to offer support to the commodities complex… despite concerns over oil demand in certain regions,” ING Economics said in a note seen by Reuters.
On Monday, the dollar index dropped to a six-week low against a basket of major currencies after a plunge in US Treasury yields last week, and remained near the low of 91.055 on Tuesday.
According to a preliminary Reuters poll, US crude oil and distillate stockpiles are projected to have decreased last week, while gasoline inventories likely grew, thus, weighing in on the price rise.
Earlier this week, Libya’s National Oil Corp (NOC) declared force majeure on shipments from the port of Hariga. The news sees Libyan oil output slump below 1 million barrels per day for the first time since October. The company said it could extend the measure to other facilities due to a budget dispute with the country’s central bank.
Saudi Arabia’s crude oil sales reportedly dropped to their lowest in eight months, as the world’s biggest oil exporter is committed to a production cap to boost oil prices.
At the same time, surging coronavirus cases in India, the world’s third-biggest importer and consumer of crude, dimmed enthusiasm for a sustained recovery in global fuel demand, capping further gains.
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