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Oil prices rise on falling U.S. dollar

Crude oil prices hits the $70 dollar mark

Oil prices advanced on Tuesday, neutralising overnight losses, as investors moved into risk assets and kept a distance from the safe-haven United States dollar, which touched multi-year lows.

Brent crude futures climbed 57 cents, or 1.26%, to $45.85 a barrel at 11:20 West Africa Time (WAT). U.S. West Texas Intermediate crude futures rose 48 cents, or 1.13%, to $43.09 a barrel.

The dollar hit its more than two years low against a basket of currencies. DXY, strained by the U.S. Federal Reserve’s relaxation of inflation policy last week, made dollar-priced commodities cheaper for global buyers.

Strong Chinese manufacturing statistics equally boosted crude oil prices, said Jeffrey Halley, a senior market analyst at OANDA.

China’s factory activity, according to the Caixin/Markit Manufacturing Purchasing Manager Index (PMI), grew at the swiftest rate in almost ten years last month, supported by the first surge in new export orders this year.

Read also: Oil prices rise on stimulus support, Bonny Light gains 14 cents

Bulls similarly boosted equities, with MSCI world equity index. However, oil which usually moves in tandem with equities, remains reined in by demand worries.

Tamas Varga, PVM analyst, said it is probable that oil prices will move below recent levels, citing substantial downward revisions to second-half demand projections by the International Energy Agency and the Organisation of the Petroleum Exporting Countries (OPEC).

Ahead of the release of U.S. inventory data from the American Petroleum Institute due at 20:30 WAT, a Reuters poll discovered analysts anticipate U.S. crude stocks to have dropped by 2 million barrels in the week to 28th August.

Gasoline stockpiles were expected to have fallen by 3.6 million barrels, with the distillate inventories including diesel and heating oil declining by 1.5 million barrels, according to 6 analysts polled by Reuters.

Ronald Adamolekun

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Ronald Adamolekun

Ronald Adamolekun is a creative writer with a mixed bag of experience in fields as diverse as data journalism, financial reporting and editing.

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