Crude Rises as Currency Moves, Stocks Rebound Boost Allure

Updated on
  • U.S. stocks gain steam and the dollar weakens for a fifth day
  • WTI crude surges to the highest level in a week on Thursday
How Will OPEC React to Continuing U.S. Oil Supply Increase?

Crude climbed to a one-week high as the slumping greenback increased the appeal of dollar-priced commodities and rebounding stock markets signaled robust economic growth.

Futures in New York rose 1.2 percent on Thursday. The outlook for economic growth -- and the fuel demand it stokes -- brightened as the S&P 500 advanced for a fifth straight day. The U.S. currency slid toward a three-year low, making it cheaper for overseas buyers to acquire oil. Investors spooked by recent volatility across global markets are emerging from the shadows and embracing riskier assets once again.

This is a bit of “risk-on appetite here,”’ Bart Melek, head of global commodity strategy at TD Securities in Toronto, said by telephone.

Oil in New York has been fluctuating around the $60-a-barrel level for most of the past week after surging to a three-year high above $66 in late January. The Organization of Petroleum Exporting Countries achieved record compliance with self-imposed supply caps in January and shipments from the group are seen declining, even as U.S. shale explorers escalated production.

West Texas Intermediate for March delivery added 74 cents to settle at $61.34 a barrel on the New York Mercantile Exchange.

Brent for April settlement fell 3 cents to end the session at $64.33 on the London-based ICE Futures Europe exchange and traded at a $3.16 premium to WTI for the same month.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell as much as 0.5 percent.

Despite Thursday’s rosier signals, demand may face downside risks. U.S. refinery utilization dropped to 89.8 percent last week, the Energy Information Administration disclosed on Wednesday. The rate has declined in every week but one so far this year.

“There’s still almost a month left of refinery maintenance and that means lower crude oil demand in the near-term,” Michael Loewen, a commodities strategist at Scotiabank in Toronto, said by telephone.

Other oil-market news:

  • Gasoline futures rose 1.3 percent to settle at $1.7358 a gallon.
  • Add independent Nigerian drillers to the list of oil producers itching to supply more crude at a time when OPEC and allies like Russia are trying to restrict output and prop up prices.
  • Oil and gas exploration last year was a money maker for the first time in a more than a decade, said Wood Mackenzie Ltd.
  • Libya’s crude production was said to be at 1.1 million barrels a day, rising from 1.05 million a day a few days ago, according to a person familiar with the matter.

— With assistance by Sharon Cho, and Grant Smith

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