Oil rises on weakened dollar ahead of US inventory data
March 31, 2016, 12:00 am TWN
SINGAPORE — Oil prices rose Wednesday on a weaker dollar after Federal Reserve chief Janet Yellen signaled a cautious approach to U.S. interest rate hikes, but gains were tempered by worries about a supply glut.
A U.S. energy department report to be released later in the day is expected to show another rise in U.S. commercial crude stockpiles, indicating softer demand in the world’s top oil consumer.
At around 0655 GMT Wednesday, U.S. benchmark West Texas Intermediate (WTI) for May delivery was up 31 cents, or 0.81 percent, at US$38.59 and Brent crude for May was 29 cents, or 0.74 percent, higher at US$39.43.
Both contracts had been sliding since the middle of last week after bouncing back from near 13-year lows reached in February.
The dollar weakened after Yellen said Tuesday that interest rates were not likely to rise before June and that any move will be slow and gradual.
A weaker U.S. currency makes dollar-priced oil cheaper for holders of other units, encouraging traders to buy and lifting prices.
But analysts said any oil price rise not driven by real demand is unlikely to last.
Prices have collapsed from levels above US$100 seen in mid-2014 largely due to supply outrunning demand as global economies, particularly China, suffer a growth slowdown.
Major producers led by Russia and Saudi Arabia will meet in Doha on April 17 to discuss measures to stabilize prices, including a proposal to freeze output.