Oil Adds To Gains As Dollar Falls Vs. Euro
Crude-oil futures rose in electronic trade Tuesday, with weakness in the U.S. dollar and benign inflation data from China allowing the commodity to build on earlier price gains prompted by supply worries.
Crude oil for May delivery rose 49 cents, or 0.5%, to $93.59 a barrel during Asian trading hours. Oil prices were aided by a pullback in the dollar against the euro , with the euro buying $1.3045, up from with $1.3004 late Monday.
The euro’s advance weighed on the ICE dollar index , which measures the greenback against a basket of six major rivals. The index fell to 82.571 from 82.752 late Monday. A weaker dollar tends to boost dollar-denominated commodities such as oil as it makes them less expensive to holders of other currencies.
Oil also advanced after China’s consumer price index rose by less than expected in March. The National Bureau of Statistics said the consumer price index (CPI) rose 2.1% from a year earlier, a milder gain than the 2.4% projected in a Dow Jones Newswires survey.
“The drop in March CPI inflation will ease market concerns on the likelihood of policy tightening in the near term. The People’s Bank of China [PBOC] has reiterated the adoption of prudent monetary policy this year,” wrote analysts at J.P. Morgan.
“As the economy is on the track of a modest recovery, and inflation remains at benign levels, we expect the PBOC to adopt a neutral policy stance, with interest rates and [bank reserve ratios] on hold throughout the year,” they wrote.
On Monday, oil futures logged their first gain in four sessions, with supply concerns returning to the fore as Iran failed to reach a deal with global powers over the country’s nuclear program, and as militants in Nigeria claimed responsibility for an deadly attack against police officers. Nigeria is the largest oil producer in Africa.
Oil finished Monday’s session up 66 cents, a gain of 0.7%, at $93.36 a barrel on the New York Mercantile Exchange.
Oil in recent sessions had been weighed by demand concerns following a slate of weak industry and economic data, including a larger-than-expected rise in weekly U.S. supplies, slower growth in U.S. job creation last month and sluggish activity in manufacturing activity in Europe and the U.S.
In other action in the energy market, gasoline for May delivery rose 1 cent, or 0.6%, to $2.92 a gallon, and May heating oil added less than 1 cent, or 0.2%, to $2.96 a gallon.
May natural gas extended losses, falling 3 cents, or 0.7%, to $4.05 per million British thermal units. Prices had gained 4.5% on Friday.
Several monthly reports on the energy market were due to be released this week: The Energy Information Administration’s Short-term Energy Outlook Report was slated for later Tuesday, while oil reports from the Organization of the Petroleum Exporting Countries and the Paris-based International Energy Agency were expected on Wednesday and Thursday, respectively.
Marketwatch
