Oil prices extend gains on weak dollar, industry data
Singapore : Oil prices rose built on recent gains today thanks to a softer dollar and industry data indicating US stockpiles sank last week.
The gains extend a seven per cent rally in the commodity since hitting today’s two-week lows as investors look ahead to a Russia-OPEC meeting at the end of the month aimed at addressing an oversupply crisis.
The latest bump came after the American Petroleum Institute, an industry-funded group, said US inventories fell 12.1 million barrels last week, according to Bloomberg News.
Eyes are now on the release of official figures from the US energy department later today, which will provide a better idea of the strength of demand in the world’s top economy and crude consumer.
US benchmark West Texas Intermediate was up 72 cents at USD 46.22 and Brent crude 64 cents higher at USD 48.62.
Prices also got support from news that imports to China – the world’s top energy consumer – rose in August for the first time in 22 months, raising hopes the the huge economy is stabilising after years of slowing.
“Looking at the erratic price action recently, traders are obviously in a state of confusion. Whipsawed by OPEC comments, which run counter to the fundamental supply argument,” said OANDA senior trader Stephen Innes in a note.
Russia and OPEC are due to meet in Algeria later this week to discuss how to deal with a supply glut that has dragged down oil prices for the past two years.
Comments from OPEC kingpin Saudi Arabia and major producer Russia earlier this week, coupled with Iranian president Hassan Rouhani’s commitment to “stabilising the market”, have raised hopes of a possible production cap.
But traders are still sceptical on whether a deal can be reached after earlier efforts this year were scuppered by Iran who refused to agree to any deal as it emerged from years of nuclear-linked Western sanctions.