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Oil holds above US$50 on weak dollar, supplies data in focus
[SINGAPORE] Oil prices held above US$50 in Asia on Wednesday thanks to a weak dollar as traders await the release of US inventory data later in the day.
Traders are expecting US Department of Energy weekly stockpile numbers to show another drop after recent losses, helping to build on a 90 per cent rebound in the commodity since the start of the year.
Oil has surged since hitting near 13-year lows at the start of the year thanks to the drop in the dollar as well as signs of a recovery in the global economy and lower production in Canada and Nigeria.
At about 0720 GMT Wednesday, US benchmark West Texas Intermediate (WTI) for July delivery was up two cents at US$50.38 a barrel while Brent North Sea for August delivery was down eight cents at US$51.40.
Interest in the commodity picked up this week after a worse-than-expected jobs report last week scythed the prospects of a US interest rate hike, which in turn sent the dollar tumbling. A weaker dollar makes oil cheaper for buyers holding different currencies.
Federal Reserve chief Janet Yellen said Monday that despite a weak jobs report, the US economy was on track towards recovery, and any hike in borrowing costs would be gradual.
"Markets digested Yellen's seemingly dovish comments, with risk appetite tentatively making a comeback," IG analyst Bernard Aw wrote in a note.
Crude has managed to push on with gains as the refusal last week by export cartel Opec to agree output limits has been offset by attacks in Nigeria that have slashed output in the key producer by a third, while the Canada's oil region is still suffering the effects of wildfires.