Oil up on weaker dollar, supply glut caps gain
LONDON: Oil prices rose for a fourth consecutive session on Tuesday boosted by a weaker dollar and investors covering short positions, but worries over persistent oversupply capped gains. Brent crude futures LCOc1, the international benchmark for oil prices, had gained 25 cents to $46.08 per barrel by 0901 GMT.
US West Texas Intermediate (WTI) crude futures CLc1 were up 23 cents at $43.61 per barrel. The gains mean the market is up slightly so far this week, after spending much of the last month in negative territory.
The dollar fell 0.1 per cent against a basket of six major currencies .DXY, propping up oil, ahead of a speech by US Federal Reserve Chair Janet Yellen.
“Short-term financial investors also significantly scaled back their net long positions in Brent on the ICE last week... and find themselves at their lowest level in a year and a half,” Commerzbank said in a research note.
“Short positions have soared to a new record high, having increased more than four-fold since the beginning of the year.”
The Organization of the Petroleum Exporting Countries and its partners have been trying to reduce a global crude glut with production cuts. Opec nations and 11 other exporters agreed in May to extend cuts of 1.8 million barrels per day (bpd) until March 2018.
Despite the cuts, which started in January, markets remain well supplied due to rising output elsewhere. Opec members Nigeria and Libya are exempt from the cuts and have raised production.