Oil rises on weaker dollar after US crude stock draw

Brent gains 3.2% so far this week ahead of meeting between Opec members and Russia

Oil rose for a second day yesterday as a weaker dollar and a surprisingly large drop in US crude inventories emboldened investors ahead of next week’s meeting between Opec members and Russia to discuss supply.

Brent crude futures rose 38 cents to $47.21 (Dh173.26) a barrel by 0917 GMT, or a 3.2 per cent gain so far this week, while US oil futures were up 41 cents at $45.75 a barrel.

The US Energy Information Administration (EIA) on Wednesday reported a 6.2 million barrel drop in crude oil inventories last week, the second biggest drop in a year.

The drawdown, along with a more benign outlook for US monetary policy, overshadowed news Russian oil output hit a new record above 11 million barrels per day this week and that Libya had exported its first oil cargo since at least 2014 from the port of Ras Lanuf.

“In a way, this strength is justified,” PVM Oil Associates strategist Tamas Varga said.

“It is also justified because of the upcoming informal Opec meeting and it’s only logical that a few days before that meeting, shorts will start covering and yesterday’s stock figures provided the perfect excuse,” he said.

Oil got an additional lift from a drop in the dollar after the US Federal Reserve kept monetary policy unchanged and signalled rates may rise more slowly than it had previously expected.