Crude-oil futures edged higher Tuesday, with prices for the U.S. benchmark closing in on their highest levels of the year as they got a lift from weakness in the U.S. dollar ahead of a series of oil inventory reports starting today.
A pledge from Saudi Arabia’s deputy oil minister, Prince Abdulaziz bin Salman, to keep pumping oil had pressured oil prices early Tuesday.
June crude CLM5, +0.42% traded at $57.75 a barrel, up 76 cents, or 1.3%, on the New York Mercantile Exchange after tapping a high of $57.83. Prices haven’t settled above $57.74 since December of last year.
June Brent crude LCOM5, +0.03% on London’s ICE Futures exchange was up 55 cents, or 0.8%, at $65.38 a barrel.
U.S. dollar weakness is having “a very bullish effect” on oil, said Jason Rotman, president of Lido Isle Advisors.
The ICE U.S. dollar index DXY, -0.76% fell Tuesday as traders looked to the Federal Reserve meeting in the U.S., which concludes with a statement on Wednesday. Commodities priced in dollars often trade inversely with the greenback, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies.
“The potential for a dovish FOMC announcement [on Wednesday] could further increase oil prices,” said Rotman.
West Texas Intermediate crude on Nymex has been “consolidating” between $56 and $58 since mid-April, and our next upside target is $60, he forecast.
Oil prices fell Monday for the second straight session after a rally earlier this month that has lifted prices for crude on Nymex by roughly 20%, based on the most-active contracts. Expectations that U.S. oil production will soon show significant declines have been a key reason for the rally. .
“The oil market has likely passed through the worst period, but it is not out of the woods yet,” analyst Michael Cohen at Barclays Research said. Supply-and-demand fundamentals remain weak, and prices are likely to bounce in the range of $55 and $75 a barrel, he said.
Barclays however, raised its oil-price forecast by $8 on the back of Middle Eastern geopolitical unrest, new oil field outages and lower U.S. natural-gas prices. It now expects Brent crude to average $60 a barrel in 2015, and $68 a barrel in 2016.
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Late Tuesday, markets will be tracking initial U.S. oil-inventory data from the American Petroleum Institute. The Energy Information Administration will release its weekly supply figures on Wednesday. Analysts polled by Platts forecast an increase of 1.4 million barrels in crude stockpiles.
Back on Nymex, May gasoline RBK5, -0.56% was little changed at $2.01 a gallon, while May heating oil HOK5, +0.08% tacked on 1.2 cents, or 0.6%, to $1.933 a gallon.
May natural gas NGK15, +0.72% traded at $2.499 per million British thermal units, up 1 cent, or 0.4%. The May futures contract expires at the session’s close.