Oil prices edge up on weak US dollar, coming US output decline
Analysts in a Reuters poll are forecasting a 2.3-million barrel draw in U.S. crude stocks during the week ended July 14.
Oil prices climbed more than 1% on Tuesday as a weaker U.S. dollar and expected decline in U.S. output outweighed softer-than-expected Chinese economic data.
Brent futures were up US $1.10, or 1.4%, at US $79.60 a barrel by 11:30 a.m. EDT (1530 GMT), while U.S. West Texas Intermediate (WTI) crude rose US $1.22, or 1.7%, to US $75.37.
That cut Brent’s premium over WTI to its lowest since early June. The smaller premium makes it less likely energy firms will spend the money to send ships to the U.S. to pick up crude cargoes for export.
The U.S. dollar (.DXY), held near a 15-month low against a basket of other currencies after U.S. retail sales rose less than expected in June.
That boosted expectations the U.S. Federal Reserve will stop hiking interest rates after a widely expected 25 basis-point increase at its July 25-26 meeting.
Higher interest rates increase borrowing costs and can slow economic growth and reduce oil demand. A weaker dollar, meanwhile, makes crude cheaper for holders of other currencies.
Looking ahead, the oil market is waiting for U.S. oil inventory data from the American Petroleum Institute (API), an industry group, on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday.
Analysts in a Reuters poll are forecasting a 2.3-million barrel draw in U.S. crude stocks during the week ended July 14.
That would be the fourth decline in five weeks, and compares with a decrease of 0.4 million barrels in the same week last year and a five-year (2018-2022) average increase of 1.9 million barrels.
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