Oil rises as Korea talks sway investors

OIL ROSE on Tuesday, paring earlier losses after South Korea said it would hold a summit with North Korea for the first time in more than a decade, which investors took as a cue to sell the US dollar and buy risk-sensitive assets such as commodities.

The prospect of OPEC and other producers, including Russia, maintaining crude output cuts in the face of a boom in US shale production has helped to push oil back above $65 a barrel this week.

Brent crude futures were last up 46 cents on the day at $66 a barrel, having risen from a session low of $65.30, while US West Texas Intermediate futures were up 51 cents at $63.08.

The dollar fell to its lowest in more than a week against a basket of currencies after a senior delegation from South Korea returned from a visit to the north, which said there was no need to keep its nuclear programme as long as there was no military threat against it and the safety of its regime was secured.

“The comments on North Korea denuclearisation have caught the market a bit off-guard and so the dollar has weakened and commodities have received a boost,” said Saxo Bank senior manager Ole Hansen.

The price had eased closer to $65 in earlier trading, pressured by the International Energy Agency’s (IEA) warning on Monday that US oil output is set to surge over the coming five years.