Oil futures rise on weaker dollar, new cash inflows | Reuters
SINGAPORE Crude oil futures rose early on Tuesday, pushed up by a weaker dollar and a flood of new cash into the market, but analysts warned that fundamentals remain weak as a producer race for customers heats up in the Middle East. Front-month Brent crude futures LCOc1 were trading at $44.84 per barrel at 0054 GMT, up 36 cents from their last settlement, and U.S. crude futures CLc1 gained 39 cents at $43.03
SINGAPORE Crude oil futures rose early on Tuesday, pushed up by a weaker dollar and a flood of new cash into the market, but analysts warned that fundamentals remain weak as a producer race for customers heats up in the Middle East.
Front-month Brent crude futures LCOc1 were trading at $44.84 per barrel at 0054 GMT, up 36 cents from their last settlement, and U.S. crude futures CLc1 gained 39 cents at $43.03.
Futures traders said prices had been lifted by a weaker dollar overnight .DXY, which potentially spurs demand from fuel importers using other currencies than the greenback, in which crude is traded.
A rush of new investment into crude futures was also pushing up prices as speculators raised their holdings of Brent futures to a record high.
Yet in physical markets, analysts warned of more supply as Saudi Arabia and Iran seemingly ramp up output in a race for customers, further flooding the market with supplies that already stand at 1 million to 2 million barrels of crude a day in excess of demand.
"Saudi Arabia announced that it will complete an expansion of its Shaybah oil field by June, pushing capacity to 12 million barrels per day (bpd). Iran oil production has now increased by 1 million bpd since the beginning of the year, while Kuwait is expecting output to reach 3.15 million bpd by June after the end of a workers strike," ANZ bank said on Tuesday.
Iran wants to get back to pre-sanction production of 4 million bpd.
"The biggest bear risk to the oil market right now is that Iran's ramp-up accelerates and then that Saudi Arabia does the same," Citi said.
Citi said the Saudis would not sit idle and watch Iran snap-up market share in hotly contested Asia.
"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," the bank said.
The cargo will be lifted in June from Aramco's storage in Japan's Okinawa prefecture and shipped to China's eastern province of Shandong, Reuters reported on Monday.
"It looks increasingly likely that the Kingdom is targeting another 0.5 million bpd of sales, bringing its production up to a steadier 11 million bpd or higher," Citi said.
Traders said that a looming gasoline glut in Asia also threatened the recent rise in crude prices as refiners flood the market with unwanted products (Graphic: tmsnrt.rs/21bOZKa).
(Editing by Richard Pullin)
This story has not been edited by Firstpost staff and is generated by auto-feed.
WASHINGTON President Barack Obama said in an interview broadcast on Monday that the United States is providing more support to Iraq as its military moves to take back territory from Islamic State, and he expects the city of Mosul will be retaken eventually.
MOGADISHU/ROME Somalia's government said on Monday about 200 or more Somalis may have drowned in the Mediterranean Sea while trying to cross illegally to Europe, many of them teenagers, when the boat they were on capsized after leaving the Egyptian shore. Italian President Sergio Mattarella had said earlier on Monday that several hundred people appeared to have died in a new tragedy in the Mediterranean, after unconfirmed reports spoke of up to 400 victims of capsizing near Egypt's coast. More than 1.2 million African, Arab and Asian migrants have streamed into the European Union since the start of last year, many of them setting off from North Africa in rickety boats that are packed full of people and which struggle in choppy seas
The Dow Jones industrial average climbed to a nine-month high on Monday, in a market buoyed by Hasbro and Disney, as investors braced for a flurry of quarterly earnings reports through the week. Chevron added 1.51 percent as crude oil prices steadied from earlier losses caused by the collapse of talks among major producers to tackle a stubborn global surplus