[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."