Oil rose from a three-month low in New York as the dollar fell for the first time in five days, bolstering the appeal of commodities priced in the U.S. currency.
The increase follows West Texas Intermediate oil’s first dip below $50 a barrel since April on Monday. Crude’s recovery from a six-year low has faltered on signs the global supply glut will be prolonged as Iran seeks to restore output, and the boost from a weak dollar may prove a short-lived reprieve.
“The dollar is a little weaker, which may provide the oil market with some short-term strength,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “There’s no fundamental case for a sustained rally, though. The medium-to-long term picture for the market remains bearish.”
After its nuclear accord with world powers, Iran will focus on regaining market share it lost due to sanctions, regardless of the impact on prices, Oil Minister Bijan Namdar Zanganeh said. In the U.S., stockpiles remain almost 100 million barrels above the five-year seasonal average even as supplies are forecast to have dropped for a second week.
WTI for August delivery, which expired Tuesday, climbed 21 cents, or 0.4 percent, to settle at $50.36 a barrel on the New York Mercantile Exchange. It touched $49.85 on Monday. The more-active September future rose 42 cents, or 0.8 percent, to $50.86. Total volume was 35 percent below the 100-day average.
September WTI gains eased after the American Petroleum Institute was said to report U.S. crude supplies rose last week. Stockpiles increased 2.3 million barrels, according to ForexLive. The contract traded at $50.73 at 4:54 p.m.
Brent for September settlement gained 39 cents, or 0.7 percent, to end the session at $57.04 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $6.18 premium to September WTI.
The Bloomberg Dollar Index, which tracks the value of the dollar against the currencies of six trading partners, dropped 0.5 percent. The Bloomberg Commodity Index increased 0.2 percent, the first gain in six days.
Iran is seeking to produce almost 4 million barrels a day within seven months of sanctions being removed, expanding to 4.7 million as soon as feasible after that, Zanganeh said in Tehran on Monday. The fourth-largest producer in the Organization of Petroleum Exporting Countries pumped 2.85 million barrels a day in June, data compiled by Bloomberg showed.
Iran is in talks with other OPEC members about raising its crude exports, Amir-Hossein Zamaninia, deputy oil minister for international and commercial affairs, said in Tehran. Shipments shrank to 1.4 million barrels a day last year due to sanctions over its nuclear program, according to the U.S. Energy Information Administration.
“The supply glut is the main focus of the market and it’s going to be exacerbated by Iranian production,” Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone Tuesday. “It looks like we’re trying to find a bottom after all the activity of the last week.”
U.S. crude inventories probably decreased by 2 million barrels in the week ended July 17, based on the median estimate in a Bloomberg survey of nine analysts before an EIA report Wednesday. Stockpiles previously slid to 461.4 million, the lowest level since March.