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Oil prices jump on weak dollar, strong investor appetite

Published 27/04/2016, 10:30 am
© Reuters.  Oil prices jump on weak dollar, strong investor appetite
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* Both Brent, U.S. crude p over half a dollar

* U.S. crude inventory draw further supports WTI crude

* But analysts warn that end of bull-run could be close

By Henning Gloystein

SINGAPORE, April 27 (Reuters) - Crude oil futures rose half a dollar in early Asian trading on Wednesday and remained near 2016 highs on the back of strong investor sentiment and a weak dollar, although analysts warned this month's bull-run could soon run out of steam.

International Brent crude futures LCOc1 were trading at $46.26 per barrel at 0023 GMT, up 52 cents, or 1.1 percent, from their last settlement.

U.S. West Texas Intermediate (WTI) crude was also up 52 cents, or 1.2 percent, at $44.56 a barrel.

WTI was further lifted after the American Petroleum Institute (API) reported a drawdown of nearly 1.1 million barrels in U.S. crude inventories last week versus a 2.4 million-barrel build expected by analysts in a Reuters poll. Brent and WTI were near 2016 highs of $46.49 and $44.83, respectively reached the previous session. strong investment appetite from financial traders, analysts said crude was receiving support from a falling dollar, which has shed 5 percent in value against a basket of other leading currencies .DXY since the beginning of the year.

A weak dollar, in which crude is traded, makes fuel imports cheaper for countries using other currencies at home, potentially spurring demand.

"A weaker U.S.-dollar and expectations of stronger fundamentals drove crude oil prices higher. Sentiment continues to improve, with major producer BP (LON:BP) suggesting the markets may rebalance by the end of the year," ANZ bank said on Wednesday.

But the bank warned that the steep gains seen this month might "test investors' bullish resolve this week."

With prices up by almost a quarter this month and by over two-thirds since their 2016 lows, traders with long positions at some point will be tempted to sell and lock in the profit. (Editing by Richard Pullin)

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