✂ Fed’s first rate cut since 2020: Use our free Stock Screener to find new opportunities fastExplore for FREE

UPDATE 3-Oil rises on weaker dollar, U.S. production outlook caps gains

Published 18/01/2017, 06:45 pm
© Reuters.  UPDATE 3-Oil rises on weaker dollar, U.S. production outlook caps gains
LCO
-
CL
-
DXY
-

* Dollar near 6-week low, supports crude oil prices

* Rising U.S. output to provide headwinds to oil futures

* Cuts seen elsewhere from field/refinery maintenance -BMI (Updates prices)

By Naveen Thukral

SINGAPORE, Jan 18 (Reuters) - Oil prices rose on Wednesday with a weaker dollar underpinning the market, although gains were limited by expectations that U.S. producers would boost output.

U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were trading up 22 cents at $52.70 per barrel at 0742 GMT.

Brent crude futures LCOc1 , the international benchmark for oil prices, were up 23 cents $55.70 a barrel.

The dollar .DXY was trading near its lowest in six weeks against a basket of currencies after U.S. President-elect Donald Trump said that the strong greenback was hurting U.S. competitiveness.

A weaker greenback makes dollar-denominated crude less expensive for users of other currencies, potentially spurring fuel demand.

"U.S. oil has been supported by considerable weakening in the U.S. dollar over the last 24 hours," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

"There are two or three key things to watch, U.S. production numbers are important, given the sharp rise we have seen in output. Another issue on the supply side is any news on OPEC countries unwinding their production."

Oil has drawn support from top crude exporter Saudi Arabia, which said it would adhere strictly to its commitment to cut output under the agreement between the Organization of the Petroleum Exporting Countries (OPEC) and other producers. the agreement, OPEC, Russia and other non-OPEC producers have pledged to cut oil output by nearly 1.8 million bpd, initially for six months, to bring supplies back in line with consumption.

The output cuts agreed by OPEC and others are likely to come largely from field and refinery maintenance, BMI Research said in a note. It said oil producers are expected to use lower volumes needed for domestic power generation in a bid to maintain export volumes.

"Sticking to output targets is important but export volumes from the participating countries are a much better indicator of how the cuts will affect the market," it said.

"Participating members are keen not to sacrifice vital export revenue so are trying to find ways to limit domestic crude usage in order to prioritise filling their contracts to foreign refiners."

At the same time, U.S. oil production is set to rise towards 9 million barrels per day, the U.S. government said on Tuesday, providing headwinds to oil futures. Ryan Zinke of Montana, President-elect Donald Trump's nominee for interior secretary, on Tuesday said he would consider an expansion of energy drilling and mining on federal lands but would ensure sensitive areas remain protected.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.