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Oil prices rebound on weaker dollar despite bigger-than-expected U.S. stock build

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by September 1, 2016 General

Reuters  |  SINGAPORE 

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By Keith Wallis

Singapore(Reuters) – Oilprices rose in early Asian trade on Thursday, rebounding on a weaker U.S. dollar after falling around 3 percent or more in the previous session following a surprisingly large build in U.S. crude and distillate stocks last week.

“The weaker dollar is providing support for Oilprices today. The direction of Oilprices is governed by supply and the strength of the dollar,” said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.

The U.S. dollar index slipped against a basket of currencies on Thursday. A weaker dollar makes greenback-denominated commodities including Oilcheaper for holders of other currencies.

U.S. crude futures had climbed 12 cents to $44.82 a barrel by 0025 GMT, after falling $1.65, or 3.6 percent, in the previous session.

Brent crude futures climbed 10 cents to $46.99 a barrel after settling $1.33 lower, or 2.8 percent, at the previous close.

That came after U.S. crude inventories rose 2.3 million barrels to 1.221 billion barrels in the week to Aug. 26, data from the Department of Energy’s Energy Information Administration showed on Wednesday. That compared with analyst expectations of a 921,000-barrel increase.

Distillate stocks, which include diesel and heating oil, unexpectedly rose by 1.5 million barrels, while gasoline inventories fell by 691,000 barrels, about half the forecast drawdown.

“In the absence of any price shocks, Oilprices remain rangebound – as soon as Oilgets down to the lower end of $40 a barrel prices find support. When Oilgets down to $40-$42 investors buy, when it gets to $48-$50 they sell again”, Barratt said.

Speculation the Organization of the Petroleum Exporting Countries and other Oilproducers might agree to curb output at talks in Algeria later this month helped fuel an 11-percent rise in crude prices in August, the best monthly return since April.

But optimism of an output freeze has since waned.

“The market is very complacent on whether OPEC can come up with a supply freeze deal. The market doesn’t believe OPEC has the ability to achieve an agreement freezing supply,” Barratt added.

Investors are also waiting for U.S. non-farm payroll data on Friday to give the market direction, ANZ Bank said in a note.

(Reporting by Keith Wallis; Editing by Joseph Radford)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

Oil prices rebound on weaker dollar despite bigger-than-expected U.S. stock build

SINGAPORE (Reuters) – Oil prices rose in early Asian trade on Thursday, rebounding on a weaker U.S. dollar after falling around 3 percent or more in the previous session following a surprisingly large build in U.S. crude and distillate stocks last week.

By Keith Wallis

Singapore(Reuters) – Oilprices rose in early Asian trade on Thursday, rebounding on a weaker U.S. dollar after falling around 3 percent or more in the previous session following a surprisingly large build in U.S. crude and distillate stocks last week.

“The weaker dollar is providing support for Oilprices today. The direction of Oilprices is governed by supply and the strength of the dollar,” said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.

The U.S. dollar index slipped against a basket of currencies on Thursday. A weaker dollar makes greenback-denominated commodities including Oilcheaper for holders of other currencies.

U.S. crude futures had climbed 12 cents to $44.82 a barrel by 0025 GMT, after falling $1.65, or 3.6 percent, in the previous session.

Brent crude futures climbed 10 cents to $46.99 a barrel after settling $1.33 lower, or 2.8 percent, at the previous close.

That came after U.S. crude inventories rose 2.3 million barrels to 1.221 billion barrels in the week to Aug. 26, data from the Department of Energy’s Energy Information Administration showed on Wednesday. That compared with analyst expectations of a 921,000-barrel increase.

Distillate stocks, which include diesel and heating oil, unexpectedly rose by 1.5 million barrels, while gasoline inventories fell by 691,000 barrels, about half the forecast drawdown.

“In the absence of any price shocks, Oilprices remain rangebound – as soon as Oilgets down to the lower end of $40 a barrel prices find support. When Oilgets down to $40-$42 investors buy, when it gets to $48-$50 they sell again”, Barratt said.

Speculation the Organization of the Petroleum Exporting Countries and other Oilproducers might agree to curb output at talks in Algeria later this month helped fuel an 11-percent rise in crude prices in August, the best monthly return since April.

But optimism of an output freeze has since waned.

“The market is very complacent on whether OPEC can come up with a supply freeze deal. The market doesn’t believe OPEC has the ability to achieve an agreement freezing supply,” Barratt added.

Investors are also waiting for U.S. non-farm payroll data on Friday to give the market direction, ANZ Bank said in a note.

(Reporting by Keith Wallis; Editing by Joseph Radford)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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