Oil Rises and Moves to Risk Assets as US Dollar Falls


MELBOURNE: Oil prices rose early in Tuesday, reversing losses overnight, as investors turned to risky assets and out of the safe haven US dollar, which slipped to a longest low. two years.

Brent crude futures rose 27 cents, or 0.6%, to $ 45.55 per barrel at 12:55 a.m. GMT, while US West Texas Intermediate (WTI) crude futures rose. rose 21 cents, or 0.5%, to $ 42.82 a barrel.

Both benchmark contracts fell about 1% on Monday amid concerns over oversupply of oil with global demand stuck below pre-COVID levels.

The dollar was last down 0.04% to 92.146 against a basket of currencies, after hitting its lowest since May 2018, continuing to decline following the US Federal Reserve’s policy change on inflation announced last week.

“This (the policy change) really confirms the fact that you are looking at negative real rates for the United States which will not be good for the US dollar. It’s good for commodities,” said Louis Crous, director investments at BetaShares. Australian provider of exchange traded funds.

The weaker US dollar makes oil and other commodities valued in dollars more attractive to global buyers.

Overall, the market remains focused on the stalled recovery in fuel demand as countries continue to fight the coronavirus pandemic with continued lockdowns of COVID-19, analysts said.

“This has created a lot of uncertainty as to whether demand for transportation fuels will ever return to normal,” ANZ Research said in a note.

Ahead of the release of data on US inventories from the American Petroleum Institute industry group, a Reuters poll found analysts expected US crude inventories to have fallen by around 2 million barrels over the course of the week before August 28.

Gasoline inventories are expected to fall by 3.6 million barrels, while inventories of distillates, which include diesel and fuel oil, are expected to fall by 1.5 million barrels, according to six analysts polled by Reuters.

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