Oil prices re­bound on less than ex­pected build in stocks

The Pak Banker - - MARKETS/SPORTS -

Oil futures re­bounded in Asian trade on Wed­nes­day, buoyed by a less than ex­pected build in crude oil stock­piles last week and a weak­en­ing dol­lar, but con­cern that a two-month rally was fad­ing in an over­sup­plied mar­ket capped gains.

A re­port by in­dus­try group the Amer­i­can Petroleum In­sti­tute late Tues­day said U.S. crude stocks likely rose last week by 2.6 mil­lion bar­rels to 534.4 mil­lion bar­rels, which would be a new record high for a sev­enth straight week, but less than an­a­lysts' ex­pec­ta­tions of a 3.3 mil­lion bar­rel build.

Brent futures LCOc1 climbed 49 cents to $39.63 a bar­rel as of 0712 GMT af­ter set­tling down $1.13 in the pre­vi­ous ses­sion.

U.S. crude CLc1 rose 61 cents to $38.89 a bar­rel af­ter end­ing the pre­vi­ous ses­sion down $1.11.

Oil prices fell about 3 per­cent in the pre­vi­ous ses­sion af­ter Kuwait and Saudi Ara­bia said they would re­sume pro­duc­tion at the jointly op­er­ated 300,000-bar­rel-per-day Khafji field even as ma­jor oil pro­duc­ers are con­sid­er­ing agree­ing on an out­put freeze.

"There's a lit­tle bit of steady­ing in oil prices in the Asian time zone. The pre­dom­i­nant at­ti­tude is one of wait-and-see un­til the En­ergy In­for­ma­tion Ad­min­is­tra­tion (in­ven­tory) fig­ures come out," said Ric Spooner, chief mar­ket an­a­lyst at Syd­ney's CMC Mar­kets.

The EIA is due to re­lease of­fi­cial crude in­ven­tory data later on Wed­nes­day.

Dovish com­ments on pos­si­ble in­ter­est rate rises by U.S. Fed Chair Janet Yellen on Tues­day had cre­ated un­cer­tainty in the mar­ket about the outlook for the U.S. econ­omy, said Jonathan Bar­ratt, chief in­vest­ment of­fi­cer at Syd­ney's Ay­ers Al­liance.

"Dovish tones should be good for oil mar­kets but this is the third time it hasn't been. I'm of the opinion dovish­ness means we've got prob­lems and the econ­omy isn't do­ing what it should be do­ing," Bar­ratt said. "I would like to see economies con­sume more but economies aren't re­spond­ing," he added.

The dol­lar index . DXY fell on Wed­nes­day af­ter slip­ping to an eight-day low in the pre­vi­ous ses­sion. A weaker dol­lar makes green­back-de­nom­i­nated com­modi­ties cheaper for hold­ers of other cur­ren­cies.

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