Oil rebounds on expected US stock draw, weaker dollar
[SINGAPORE] Crude futures rose about 1 per cent on Wednesday to recover some ground after steep drops in the previous session, boosted by a weaker dollar and expectations that US crude stocks fell for a fourth straight week.
July Brent crude gained 64 cents to US$64.36 a barrel by 0851 GMT, while US crude was up 68 cents at US$58.71 a barrel.
The dollar was trading down 0.33 per cent against a basket of currencies, following a surge on Tuesday.
A weaker US dollar makes dollar-backed commodities such as crude oil more attractive for holders of other currencies. "We are hostages a little bit to the swings in the currency markets," said Ole Hansen, head of commodity strategy at Saxo Bank.
US commercial crude inventories are expected to have fallen by 2 million barrels last week, a preliminary Reuters survey showed. Declining US stockpiles of crude and oil products in past weeks indicate robust demand in the world's largest oil consumer, supporting prices.
The American Petroleum Institute will release its data on Wednesday at 4:30 pm ET (2030 GMT), delayed by one day because of the U.S. Memorial Day holiday on Monday. The US government's Energy Information Administration will publish its own data on Thursday at 11:00 am ET (1500 GMT). "If global demand continues to surprise to the upside and diesel somehow manages to hold value, then crude can surge,"analysts at Energy Aspects said in a note.
However, investors have started taking profits on Brent as hedge funds and money managers cut their bets on rising prices for a second straight week. "Further unwinding of these positions would remove a key pillar of support to prices," analysts at BMI Research said in a note. "This trajectory reinforces our view of downside still to be priced in the oil price in the second half of 2015," BMI said, adding that they expected Brent to average US$59 a barrel this year.
Investors also remained wary of ample supply as top Opec producers Saudi Arabia and Iraq kept exports near record levels. The Organization of the Petroleum Exporting Countries is expected to keep production steady at its meeting on June 5. "I am not so bullish on fundamentals," said a bank trader who declined to be identified due to company policy. "Brent could possibly go down to US$60 on profit-taking."
REUTERS
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Energy & Commodities
Oil jumps, equities fall as Iran blasts fan Middle East fears
Gold set for fifth weekly gain as geopolitical risks buoy demand
Oil holds near 3-week low as US sanctions interrupt easing tensions
Seatrium unit ordered to pay US$108 million in arbitration over equipment supply contracts
BP reshapes its leadership team as some executives leave
BHP to decide on future of nickel business by August, trims met coal estimates