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Oil prices edge up on weak dollar ahead of US inventory data
[NEW YORK] Oil prices rose on Tuesday, supported by a weaker dollar but US crude's gains were limited by expectations for a weekly rise in US crude stockpiles.
Brent crude futures rose 25 cents to settle at US$65.79 a barrel, a 0.4 per cent gain. Brent reached a low of US$65.30 a barrel and a six-day high of US$66.16 a barrel during the session.
West Texas Intermediate (WTI) crude futures rose 3 cents to settle at US$62.60 a barrel. WTI notched its own six-day high at US$63.28 a barrel.
Oil prices fell in post-settlement trade after data from the American Petroleum Institute showed US crude inventories rose by 5.7 million barrels last week, a bigger-than-expected rise.
Oil drew support as the US dollar fell to its lowest in more than a week against a basket of currencies on news from South Korea that North Korea was willing to hold talks with the United States on denuclearization, and would suspend nuclear tests during any discussions.
South Korea also said it would hold a summit with North Korea for the first time in more than a decade.
The news led investors to sell the US dollar and instead buy riskier assets such as commodities.
The dollar index last was down by half a per cent. A weaker greenback makes dollar-denominated commodities cheaper for holders of other currencies.
"If you reduce geopolitical risk in the world, it might be a better place to do business and that could be bullish," said Phil Flynn, analyst at Price Futures Group in Chicago.
US oil prices were under pressure from expectations that weekly crude inventory data from the US government, due on Wednesday, would show a second straight rise.
Analysts polled by Reuters ahead of the data on average expect US crude stocks rose by 2.7 million barrels in the week ended March 2.
Inventories are rising during the seasonal maintenance period for refineries, when shutdowns mean they need less crude.
A surge in US crude production to more than 10 million barrels per day (bpd) has helped the country overtake top exporter Saudi Arabia.
Output hit a record 10.057 million bpd in November, according to the US Department of Energy.
The US Energy Information Administration said in a monthly report it expected fourth-quarter US crude output to reach an average of 11.17 million bpd, up from its forecast a month ago of 11.04 million bpd.
The continued growth of US shale has been a theme at the CERAWeek conference in Houston this week, said John Kilduff, partner at investment manager Again Capital in New York.
Brent had dipped closer to US$65 in earlier trading, pressured by the International Energy Agency's (IEA) warning on Monday that US oil output was set to surge over the coming five years.
The prospect of the Organization of the Petroleum Exporting Countries and non-member producers, including Russia, maintaining crude output cuts in the face of a boom in US shale production helped lift Brent back above US$65 a barrel this week.
April US petrol futures rose as much as 0.50 per cent to hit US$1.9443 a gallon, the highest since Jan 30, before retreating.