Oil prices rose on Tuesday, supported by a weaker U.S. dollar which boosts demand for dollar-denominated assets from buyers holding foreign currencies. Additionally, there are expectations that crude inventories fell in the United States, the world’s biggest oil user, though rising coronavirus cases in Asia capped gains.
Brent crude futures for June delivery rose by 54 cents, or 0.8%, to $67.59 a barrel at 0415 GMT.
U.S. West Texas Intermediate (WTI) crude futures for May delivery, which expire on Tuesday, were up 53 cents, or 0.8%, to $63.91 barrel. The more-active June contract was at $63.93, up 0.8%, or 50 cents.
Effect of the weak U.S Dollar on Oil Demand
The dollar index slumped to a six-week low against other major currencies on Monday following a plunge in U.S. Treasury yields last week and remained near the low at 91.055 on Tuesday.
“U.S. dollar weakness continues to offer support to the commodities complex …despite concerns over oil demand in certain regions,” ING Economics.
Buyers using other currencies pay less for dollar-denominated oil when the greenback weakens.
Additionally, U.S. crude and distillate stockpiles were expected to have dropped last week, while gasoline inventories likely rose.
A poll was conducted ahead of reports from the American Petroleum Institute (API) due on Tuesday and the Energy Information Administration (EIA), the U.S. Department of Energy’s statistical arm, on Wednesday.
Libya’s National Oil Corp (NOC) declared force majeure on Monday on exports from the port of Hariga and said it could extend the measure to other facilities because of a budget dispute with the country’s central bank.
However, the deteriorating situation in India, the world’s third-biggest oil importer and consumer, is worrying investors as countries have already started issuing travel bans to the country.