Oil Prices edged higher aided by a weaker dollar and wagers that OPEC nations would maintain their crude output target at the current level and weather pressure for an increase.
The commodity’s rebound from a six year low is supporting the Organization of Petroleum Exporting Countries’ strategy to pump more oil to an already oversupplied market.
More than 90% of 34 analysts polled by Bloomberg expect OPEC, which produces more than 40% of the world’s total crude to keep its oil quota unchanged at 30 million barrels a day despite speculation by other observers including Morgan Stanley and Pimco that they would lift their official target.
“We are drawing inventories pretty strongly each week and that probably will continue,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion, told Bloomberg.
“Oil is rising and some of this is being driven by dollar weakness.”
Light Sweet Crude for July delivery most recently edged up $1.11 or 1.84% to trade at $61.43 a barrel on the New York Mercantile Exchange. Based on the prices for the most active contracts, this is the highest the prices have been since May 22.
Brent Futures, the global benchmark, most recently added 57 cents or 0.88% to trade at $65.70 a barrel on the London based ICE Futures Exchange.
The dollar fell by 1% on Tuesday according to the Wall Street Journal Dollar Index which tracks the Greenback against a basket of foreign currencies.
A weaker dollar is bullish for the demand of dollar denominated commodities like oil as it makes them affordable to holders of foreign currencies.
Also aiding the rally were comments by the Saudi Oil , Ali al-Naimi, who said that he expected demand to pick up in the second half of the year as supply increases.
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