Oil jumps on weak dollar
Oil futures rose 3 percent Wednesday, rallying in tandem with share prices on Wall Street and in reaction to a weaker dollar, ahead of U.S. government data likely to show a smaller build in crude inventories in the latest week.
The International Energy Agency’s remarks downplaying expectations for a deluge of Iranian oil also soothed concerns that a supply glut was worsening from Tehran’s efforts to ramp up its crude exports to pre-sanction levels.
Both benchmarks had fallen about 3 percent on Tuesday on concerns about concerns about swelling global oil supplies, including new output from Kuwait and Saudi Arabia.
In Wednesday’s session, share prices on Wall Street .SPX, a proxy for confidence in oil, hit 3-month highs. The dollar fell to a near two-week low, making oil and other commodities denominated in the greenback more attractive to users of the euro and other currencies.
“This year’s unusually strong correlation between the stock market and energy futures has been largely inspired by the common support of low to negative rates,” said Jim Ritterbusch of Chicago-based energy markets consultancy Ritterbusch & Associates.
The market will look out for last week’s U.S. crude inventory data at 10:30 a.m. EDT from the government’s Energy Information Administration.
The American Petroleum Institute, an industry group, on Tuesday said U.S. crude stocks likely rose last week by 2.6 million barrels to 534.4 million barrels, which would be a new record high for a seventh straight week. Analysts polled by Reuters expect a 3.3 million barrel build. Reutersoil