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Oil market rises before US inventories data
[LONDON] World oil prices edged higher on Wednesday as traders eagerly awaited the weekly update on commercial crude stockpiles in top consumer the United States.
Gains were however limited by the strong dollar and persistent concerns about a global supply glut.
In midday London deals, European benchmark Brent North Sea crude for April delivery rose 20 cents to $56.59 a barrel.
US benchmark West Texas Intermediate for April added 18 cents to US$48.47 a barrel.
Crude futures had suffered heavy falls on Tuesday as the rebounding dollar pushed the market sharply lower.
WTI tumbled US$1.71 and Brent fell US$2.14 as the greenback soared against major rivals.
The rallying US unit makes dollar-priced oil more expensive for buyers using weaker currencies. That tends to dent demand and weigh on price levels.
The European single currency on Wednesday hit new multi-year dollar lows on expectations of a US interest rate hike. The euro slid to US$1.0560 - the lowest level since March 2003.
"The strong US dollar continues to dominate the oil market, limiting any upside potential in crude oil prices," said Myrto Sokou, senior research analyst at brokerage Sucden Financial in London.
She added: "Today, all eyes will be on the US inventories report."
The US government's Department of Energy will unveil its update on American oil reserves for the week to March 6.
US crude reserves likely rose 4.75 million barrels in the week ended March 6, according to a survey by Bloomberg News. It added that total supplies likely soared to 444.4 million, the highest level since the DoE started compiling weekly inventory data in 1982.
Crude prices lost some 60 per cent of their value 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 following a slowdown in US oil drilling activities, but analysts say volatility is likely to continue for some time.
Separately, the DoE's market outlook report released on Tuesday projected for this year "continuing large builds in US crude oil inventories, including at the Cushing, Oklahoma, storage hub."