Commodities

Oil edges up on weak dollar; rebound in Libyan production weighs

Reuters Seoul | Updated on January 15, 2018 Published on April 04, 2017

crude

Oil prices rose slightly on Tuesday due to a weaker dollar, though a rebound in Libyan production put pressure on the market and rising US drilling signalled the potential for increased supply and capped price gains.

International Brent crude futures were trading up 7 cents at $53.19 a barrel at 0412 GMT from the previous session.

US benchmark West Texas Intermediate crude oil prices were up 4 cents at $50.28 a barrel.

Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney, said oil prices are expected to pick up on dollar's weakness similar to gold.

“The range is $47 to $55 a barrel and we expect the top end to be tested,” Barratt said.

Gold hits 1-week high

Gold prices hit one-week highs on Tuesday, buoyed by a weaker dollar and as investors turned to safe-haven assets on worries over geopolitical tensions. A weaker greenback makes dollar-denominated oil cheaper for the holders of other currencies.

Despite the support from a weaker dollar, rising production continues to pressure the oil market, which opened lower in early Asian trading.

“Crude oil prices fell as increased drilling in the United States and a rebound in Libyan output weighed on investor sentiment,” said ANZ bank in a note.

Libya crude output

Libya's crude output had increased on Monday after state-owned National Oil Corp (NOC) lifted a force majeure on loadings of Sharara oil from the Zawiya terminal in the west of the country, sources familiar with the matter told Reuters.

Meanwhile, US drillers had last week added rigs for an 11th week in a row, data from energy services company Baker Hughes showed on Friday, extending a 10-month drilling recovery.

Other OPEC producers are also raising output. Iran's exports of crude oil and gas condensate hit a record 3.05 million barrels per day (bpd) by March 20, the end of the Iranian month of Esfand, according to a report by the Islamic Republic News Agency (IRNA).

OPEC-led output cut

The oil market continues to look for signs of a tightening market as concerns linger that compliance with producer-led output cuts remains insufficient to erode a supply glut and the United States raises oil output.

The Organization of the Petroleum Exporting Countries (OPEC), and non-OPEC members including Russia, had agreed late last year to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017. The market's focus has now shifted whether the major oil producers will extend the cuts.

Published on April 04, 2017
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