Oil prices gained slightly on Tuesday, mostly supported by a weaker US dollar but analysts are concerned that data released on Tuesday afternoon and Wednesday morning will show a rise in US crude inventories. Anadarko photo.
Oil prices as greenback falls to lowest in over a week
Oil prices rose slightly Tuesday on a falling US dollar, but gains were limited due to forecasts of rising US crude inventories.
By 3:15 p.m. EST, Brent crude was up by 17 cents to $65.71/barrel and US WTI fell 6 cents to $62.51/barrel. The Canadian Crude Index hit $39.86.
According to Reuters, news from South Korea that North Korea is willing to have talks with the US about de-nuclearization and suspend nuclear tests during discussions dropped the greenback to its lowest level in over a week.
South Korea said it would host the summit.
Investors sold off US dollars and bought riskier assets, including commodities. The lower-valued US dollar made oil cheaper for buyers using other currencies.
“Initially, the market is looking at it as the positive side of this is the world will be doing business. It’s one less risk on the table,” Phil Flynn, analyst at Price Futures Group told Reuters.
US oil prices faced pressure from expectations of rising crude inventories. Analysts participating in a poll by Reuters say they expect US crude stocks to rise for a second straight week.
On Tuesday afternoon, the American Petroleum Institute will release its trade inventory data and the US Energy Information Administration will release its official data on Wednesday morning.
Refineries undergoing routine seasonal maintenance have shutdown production, resulting in rising US crude inventories. As well, US crude production has topped 10 million barrels per day (b/d), overtaking Saudi Arabia.
According to the US Department of Energy, US oil production hit a record high of 10.057 million b/d in November.
“The rising oil-production profile in the U.S. remains the predominant bearish factor affecting prices,” Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics told Reuters.
John Kilduff, partner at Again Capital told Reuters that rising US production has been a major theme at the CERAWeek conference in Houston this week.
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