Hong Kong - Oil rose as the dollar weakened, edging back above the $50 level where prices have hovered since rallying on OPEC’s decision to cut output last month.
West Texas Intermediate futures advanced 1 percent in New York, erasing Monday’s 0.8 percent slide. The dollar sank, increasing the appeal of commodities denominated in the currency, on speculation that a pick-up in the global inflation outlook won’t tempt the Federal Reserve to quicken the pace of monetary tightening. US crude inventories probably added 2.1 million barrels last week, a Bloomberg survey showed before government data Wednesday.
Oil is up about 13 percent since the Organisation of Petroleum Exporting Countries reached a deal September 28 in Algiers to manage supply, and prices have closed slightly above $50 a barrel for six of the last eight sessions as investors await a meeting next month where the group is scheduled to implement the agreement. An OPEC committee will meet later this month to try to resolve differences over how much individual members should pump.
“The oil price is consolidating,” Chris Weston, chief market strategist at IG in Melbourne, said by phone. “The market has priced in the good OPEC news. It’s unlikely that we’ll see a collapse in oil; we’d need to see something pretty disappointing as we head into the November meeting for that to happen.”
West Texas Intermediate for November delivery was at $50.43 a barrel on the New York Mercantile Exchange, up 49 cents, at 11:57 a.m. in London. The contract dropped 41 cents to $49.94 a barrel on Monday, declining a second day. Total volume traded was about 17 percent below the 100-day average.
Brent for December settlement was at $51.94 a barrel, up 42 cents, on the London-based ICE Futures Europe exchange. Prices fell 43 cents, or 0.8 percent, to $51.52 a barrel Monday. The global benchmark crude traded at a $1.15 premium to December WTI.
The OPEC plan is an important development, and may see market rebalancing “much sooner” than the end of 2017, International Energy Agency Executive Director Fatih Birol said in a Bloomberg TV interview. On the other hand, prices at $60 a barrel would give US shale drillers a “strong impetus” to boost production.