By Devika Krishna Kumar
| NEW YORK
NEW YORK Oil prices rose about 2 percent on Tuesday and hit a one-week high, boosted by a weaker dollar, short covering and expectations that crude inventories in the United States may decline for the third consecutive week. It was the fourth straight session of gains for oil, which also got some support after the chief executive of U.S. shale oil producer Pioneer Natural Resources Co said Saudi Arabia likely will move to boost oil prices to prop its own national finances. With the end of the quarter approaching, brokers said investors were covering short positions.Brent crude futures, the international benchmark for oil prices, gained $1.01 or 2.2 percent to $46.84 per barrel by 11:49 a.m. EDT (1549 GMT).U.S. crude futures were up 92 cents, or about 2 percent, at $44.30 per barrel.Brent touched a one week high at a session high of $47.06. U.S. crude hit its highest since June 19 at $44.44.
Tim Evans, Citi Futures' energy futures specialist, said in a note that oil's upswing was "a technical correction after the declines of the past five weeks" helped along by boosts from a weaker dollar and forecasts for a weekly draw in U.S. crude inventories.Industry group American Petroleum Institute (API) was due to issue its inventory data on Tuesday afternoon. On Wednesday morning, the U.S. Energy Information Administration (EIA) will report official inventory data. Analysts estimated that crude stocks fell 2.3 million barrels in the week to June 23.The dollar fell ahead of a speech by U.S. Federal Reserve Chair Janet Yellen in London.
Commerzbank said in a research note that long positions in Brent on ICE are "at their lowest level in a year and a half," while short positions "have soared to a new record high, having increased more than four-fold since the beginning of the year." The Organization of the Petroleum Exporting Countries and other producing nations have sought to reduce a global crude glut with production cuts of 1.8 million barrels per day (bpd).The cuts began in January and were later extended through March. Yet global crude inventories have not fallen as expected, as U.S. producers and others outside the OPEC-led regime have boosted output.
Ian Taylor, head of the world's largest independent oil trader Vitol, told Reuters Brent prices would stay in a range of $40-$55 a barrel for the next few quarters.OPEC delegates said the cartel will not rush into making a further cut in output or end some countries' exemptions from output limits, although a meeting in Russia next month is likely to consider further steps.OPEC members Nigeria and Libya are exempt from the cuts and have raised production substantially. Iran has also been allowed a small increase.Libya's oil production stands at about 935,000 barrels per day (bpd) this week after touching as high as 950,000 bpd last week, Libyan oil sources said. (Additional reporting by Julia Payne in London, Naveen Thukral in Singapore; Editing by Adrian Croft and David Gregorio)
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Updated Date: Jun 27, 2017 22:49 PM