Crude futures rebound from early weakness with the West Texas Intermediate crude, the US benchmark hitting a two month high on growing confidence that a weekly supply report would show a decline in stockpiles.
According to MarketWatch, Light sweet crude for May delivery most recently gained $1.58 or $3.00 to trade at $53.56 a barrel on the New York Mercantile Exchange. This is the highest level for the US’s most active contract since February 17.
Brent crude for May delivery gained $1.07 or 1.84% to $58.87 a barrel on the London-based ICE Futures Exchange.
Prices had plummeted in early trading after the dollar strengthened against a basket of foreign currencies.
A robust dollar makes dollar denominated commodities like oil more expensive to holders of foreign currencies.
The prices, however, shrugged the dollar strength to rebound as traders focused on the Stockpile data by the Energy Information Administration expected on Wednesday morning.
Earlier this week, oilfield services provider. Genscape Ltd reported to its clients that supplies to a key storage hub unexpectedly declined during the week between March 26 and April 3 according to a broker.
Cushing, Oklahoma is an important storage and delivery point for the Nymex futures contract.
Crude oil inventories have grown in recent months causing crude prices to fall on oversupply and tepid demand. Investors are however upbeat that demand is picking up after Saudi Arabia hiked the prices of its crude deliveries in Asia.
Goldman Sachs analysts said in a note Tuesday that they expected prices to pick up as we approach 2016 but warned that supply and oil stockpiles could reach a new high later this month.
“While the build in US crude inventories has been unprecedented, our rig-based modeling of near-term US production points to production nearing a peak,” they told Yahoo News.
“Combined with an expected ramp-up in refinery runs, we expect U.S. crude oil inventories to peak in April.”
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