NEW YORK Crude oil prices rose about 3 percent on Tuesday on the back of a rally in the gasoline market and as a tumbling dollar boosted commodities denominated in the greenback after bets the Federal Reserve will hold U.S. interest rates where they are.
U.S. gasoline futures RBc1 rallied more than 3 percent to their highest since August on Tuesday, boosting refinery margins 1RBc1-CLc1, after a series of Gulf Coast refinery unit outages, buying from Venezuela and a reported drop in New York inventories.
"I think the market has become more optimistic on oil products," said Scott Shelton, broker and commodities specialist with ICAP in Durham, North California. "If refining margins stay strong, crude runs will be quite high and that will make the odds of a crude stock draws increase significantly."
Analysts polled by Reuters expect the U.S. government to announce on Wednesday that crude stocks rose 2.4 million barrels last week while distillate and gasoline stockpiles fell. Industry group American Petroleum Institute will issue preliminary inventory at 4:30 p.m. EDT (2030 GMT). [EIA/S]
Crude futures rose from early in the session as the dollar .DXY fell for a second straight day ahead of Wednesday's Fed policy statement. The dollar rallied earlier this year, weighing on oil, as investors braced for possible interest rate hikes from the Fed's Federal Open Market Committee (FOMC). [USD/]
Brent crude futures LCOc1 finished up $1.26, or 2.8 percent, at $45.74 a barrel.
U.S. crude futures CLc1 settled up $1.40, or 3.3 percent, at $44.04.
Oil prices are headed for a fourth straight week of gains, with Brent on track to finish April nearly 16 percent higher for its best monthly gain in a year, despite aborted plans by major producers to agree on an output freeze at a meeting in Qatar earlier this month.
"For now, the line of least price resistance remains to the upside and we will be reassessing this view in light of tomorrow's FOMC statement," said Jim Ritterbusch of Chicago-based oil market consultancy Ritterbusch & Associates.
Still, analysts warned of possible price wars and excessive supply ahead.
Citigroup said Saudi Arabia could target 500,000 barrels per day in new sales that would bring its output to at least 11 million bpd in a tussle with Iran for market share.
"If anyone had a doubt about Saudi Aramco's ability to use its logistical system and spot sales to increase market share, its recent 730,000-barrel sale of a cargo to a Chinese teapot refiner in Shandong should lay any doubts to rest," Citi said in a note to clients.
(Additional reporting by Amanda Cooper in LONDON and Henning Gloystein in SINGAPORE; Editing by David Gregorio and Marguerita Choy)
This story has not been edited by Firstpost staff and is generated by auto-feed.
First Published On : Apr 27, 2016 01:45 IST