Oil Prices Extend Gains As Dollar Pulls Back
Futures prices for U.S. benchmark crude oil rose Monday, with weakness in the dollar providing a platform for the commodity to reach for a new 52-week high.
Oil for August delivery rose 40 cents, or 0.4%, to $108.45 a barrel in electronic trade.
The dollar-denominated commodity benefitted from a decline in the greenback overnight, with the moves weighing on the ICE dollar index . The dollar lost some ground against the Japanese yen as Prime Minister Shinzo Abe’s ruling party consolidated its power in this weekend’s election.
Oil and other commodities priced in dollars tend to gain when the U.S. unit loses ground, as the resources become less expensive to buy for holders of other currencies.
On Friday, oil futures rose 1 cent to $108.05 a barrel on the New York Mercantile Exchange, enough to leave them with their highest close since March 2012.
Investors later Monday may look for signs about energy demand from a July reading on U.S. manufacturing activity, national activity data from the Chicago Fed, and June sales of existing homes.
Recent declines in U.S. crude supplies and political turmoil in Egypt have helped oil prices advance nearly 15% over the past four weeks.
“Improving fundamentals, less concern about [the Federal Reserve] tapering and a still tense geopolitical situation have boosted oil prices in recent weeks, but the improvement may not last,” wrote Barclays commodities analysts on Friday.
“We expect the move up in oil prices to run out of steam, as weak demand caps the upside, and we forecast Brent crude to average around $107 a barrel in [the third quarter], slightly below currently prevailing levels.”
September Brent crude on Monday was up 13 cents, or 0.1%, at $108.20 an barrel, trading below the price for Nymex oil futures.
Brent crude was also briefly at a discount to Nymex crude on Friday — Previously, Brent had enjoyed a premium to its U.S. rival since 2010, according to weekly settlement prices.
Elsewhere Monday, August gasoline rose 1 cent, or 0.2%, to $3.13 a gallon. The contract rose 0.2% last week.
August heating oil rose nearly 1 cents to $3.095 a gallon, adding to last week’s advance of about 2%.
August natural gas , however, fell 5 cents, or 1.4%, to $3.74 per million British thermal units, giving up a portion of last week’s 4% gain.
Source : Marketwatch
