Oil market advances

[LONDON] World oil prices rose on Thursday on the back of the weaker dollar, but gains were capped after US crude reserves swelled again to a record high.

In midday London deals, European benchmark Brent North Sea crude for April delivery advanced 82 cents to $58.36 a barrel.

US benchmark West Texas Intermediate (WTI) for April added 52 cents to US$48.69 a barrel.

"Despite the bearish oil inventories report yesterday, crude oil prices rebounded in early trade this morning supported by a slightly softer US dollar," said Sucden brokers analyst Myrto Sokou on Thursday.

"Brent futures recovered and climbed higher towards US$59 per barrel while WTI futures rose above US$48.50 per barrel." The weaker greenback makes dollar-denominated crude cheaper for buyers using stronger currencies, which tends to stimulate demand and prices.

Crude futures had finished mixed Wednesday after a key report showed US crude stockpiles had struck another record high, adding to an oversupplied global market.

The US Department of Energy said crude oil inventories surged by 4.5 million barrels in the week to March 6 to 448.9 million.

That was the highest level since the beginning of the weekly data series in 1982.

Crude prices lost some 60 per cent of their value to decline to about US$40 between June and late January owing to an oversupply in world markets, a weak global economy and the strong dollar.

Prices have since rebounded somewhat following a slowdown in US oil-drilling activities, but analysts say volatility is likely to continue for some time.

Elsewhere, investors were monitoring the progress of talks between the United States and other major Western powers and Iran on Tehran's contested nuclear programme as a deadline at the end of March nears.

The Islamic republic has been crippled by a series of UN and US sanctions, including on crude exports, aimed at bringing an end to its nuclear drive, which the West says is being used to develop atomic weapons. Iran denies the allegations.

"Prices are likely to remain in a tight range for the next two weeks until the market gets more clarity on the ongoing negotiations between Iran and the US over the lifting of sanctions," said Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at business consultancy EY.

AFP