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Oil edges up on weak dollar; investors weigh rising supplies, demand outlook

Published 04/09/2021, 09:48 AM
Updated 04/09/2021, 09:50 AM
© Reuters
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By Florence Tan
SINGAPORE, April 9 (Reuters) - Oil prices edged up in early
Asian trade on Friday, supported by a weaker dollar, as
investors weighed rising supplies and the impact on fuel demand
from the COVID-19 pandemic.
Brent crude futures LCOc1 for June climbed 7 cents, or
0.1%, to $63.27 a barrel by 0106 GMT while U.S. West Texas
Intermediate (WTI) crude CLc1 for May was at $59.77 a barrel,
up 17 cents, or 0.3%.
"A weaker USD and falling US bond yields helped support
investors' appetite in commodity markets," ANZ analysts said in
a note.
A weaker dollar makes oil cheaper for holders of other
currencies, which usually helps boost crude prices.
Both contracts are on track to post a 2%-3% drop this week
after a decision by the Organization of the Petroleum Exporting
Countries (OPEC) and its allies, including Russia, a group known
as OPEC+, to gradually increase supplies by 2 million barrels
per day between May and July. However, analysts expect global oil inventories to continue
to fall as fuel demand accelerates in the second half of this
year as the global economic recovery gathers steam.
But concerns are surfacing that renewed lockdowns in parts
of the world to curb rising COVID-19 cases and problems with
vaccinations could alter the oil demand picture.
Stephen Innes, chief global markets strategist at Axi, said
oil prices are expected to trade in a range between $60 and $70
as investors weigh these factors.
He added that the sudden calm and drop in volatility in oil
markets have attracted passive investors as prompt intermonth
spreads have widened in backwardation.
In a backwardated market, as Brent is in now, front-month
prices are higher than those in future months implying tighter
supplies.

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