Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
[Stephanie Kelly, Reuters]
Oil prices rose on Tuesday, supported by a weaker dollar but U.S. crude’s gains were limited by expectations for a weekly rise in U.S. crude stockpiles.
Brent crude LCOc1 futures rose 25 cents to settle at $65.79 a barrel, a 0.4 percent gain. Brent reached a low of $65.30 a barrel and a six-day high of $66.16 a barrel during the session.
West Texas Intermediate (WTI) crude CLc1 futures rose 3 cents to settle at $62.60 a barrel. WTI notched its own six-day high at $63.28 a barrel.
Oil prices fell in post-settlement trade after data from the American Petroleum Institute showed U.S. crude inventories rose by 5.7 million barrels last week, a bigger-than-expected rise.
Oil drew support as the U.S. dollar fell to its lowest in more than a week against a basket of currencies on news from South Korea that North Korea was willing to hold talks with the United States on denuclearization, and would suspend nuclear tests during any discussions.
South Korea also said it would hold a summit with North Korea for the first time in more than a decade.
The news led investors to sell the U.S. dollar and instead buy riskier assets such as commodities.
The dollar index last was down by half a percent. A weaker greenback makes dollar-denominated commodities cheaper for holders of other currencies.
“If you reduce geopolitical risk in the world, it might be a better place to do business and that could be bullish,” said Phil Flynn, analyst at Price Futures Group in Chicago.
U.S. oil prices were under pressure from expectations that weekly crude inventory data from the U.S. government, due on Wednesday, would show a second straight rise.
Analysts polled by Reuters ahead of the data on average expect U.S. crude stocks rose by 2.7 million barrels in the week ended March 2.
Inventories are rising during the seasonal maintenance period for refineries, when shutdowns mean they need less crude.
A surge in U.S. crude production to more than 10 million barrels per day (bpd) has helped the country overtake top exporter Saudi Arabia.
Output hit a record 10.057 million bpd in November, according to the U.S. Department of Energy.
The U.S. Energy Information Administration said in a monthly report it expected fourth-quarter U.S. crude output to reach an average of 11.17 million bpd, up from its forecast a month ago of 11.04 million bpd.
Brent had dipped closer to $65 in earlier trading, pressured by the International Energy Agency’s (IEA) warning on Monday that U.S. oil output was set to surge over the coming five years.
The prospect of the Organization of the Petroleum Exporting Countries and non-member producers, including Russia, maintaining crude output cuts in the face of a boom in U.S. shale production helped lift Brent back above $65 a barrel this week.
April U.S. gasoline futures RBc1 rose as much as 0.50 percent to hit $1.9443 a gallon, the highest since Jan. 30, before retreating.
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