Oil prices rise on weakening dollar, but plentiful supplies cap gains
SINGAPORE: Oil prices rose on Thursday, driven up by a weakening dollar, but gains were capped by plentiful supplies and inventories despite an effort by OPEC and other producers to cut output and prop up the market.
Brent crude futures LCOc1, the international benchmark for oil prices, were trading at $55.59 per barrel at 0313 GMT, up 51 cents, or 0.93 per cent, from their last close. US West Texas Intermediate (WTI) crude futures CLc1 were at $53.22 a barrel, up 47 cents, or 0.89 per cent.
Traders said that the increase was largely down to a weakening dollar, which has lost 3.9 per cent in value since its January peak. Since oil is traded in dollar, a cheaper greenback makes fuel purchases less costly for countries using other currencies, potentially spurring demand.
However, oil price gains were capped by data from the US Energy Information Administration (EIA) which showed a 2.84 million barrels increase in commercial crude inventories to 488.3 million barrels, which add to a 6.3 per cent rise in US oil production since the middle of last year to 8.96 million barrels per day (bpd). “EIA estimates that crude oil and other liquids inventories grew by 2.0 million barrels per day in the fourth quarter of 2016, driven by an increase in production and a significant, but seasonal, drop in consumption,” the agency said.