Oil Inches Higher as Dollar Weakens
December 17 2018 - 10:01AM
Dow Jones News
By Christopher Alessi and Amrith Ramkumar
-- Oil prices inched higher Monday, boosted by a weaker dollar
that makes commodities cheaper for overseas buyers.
-- Brent crude, the global oil benchmark, was trading up 0.5% at
$60.56 a barrel on London's Intercontinental Exchange.
-- West Texas Intermediate futures, the U.S. oil standard, were
up 0.1% at $51.26 a barrel on the New York Mercantile Exchange.
HIGHLIGHTS
Dollar Support: A weaker dollar helped bolster oil prices at the
start of the week, after a stronger U.S. currency had provided a
headwind for crude prices at the end of last week and for much of
the year.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 other currencies, fell 0.3%. Still, some analysts expect
investors to continue favoring the safety of the dollar amid fears
of a global economic slowdown, potentially challenging commodities
moving forward.
Those broad growth fears have stoked worries about weaker oil
consumption, hurting oil in recent weeks, analysts say.
Rigs: Analysts were also weighing figures from Baker Hughes
Friday showing a decline in the number of rigs drilling for oil in
the U.S. last week. The rig count fell by four to 873 last week, a
sign of slowing production. Record U.S. output has been a major
factor in oil's recent slide.
INSIGHT
OPEC+: Oil market participants continue to debate whether a
decision to cut output by the Organization of the Petroleum
Exporting Countries and its partner producers, led by Russia, will
be enough to rein in a burgeoning supply glut and bolster
prices.
As part of the deal, OPEC and its allies plan to curb crude
production by a collective 1.2 million barrels a day starting next
month. But while news of the deal initially bolstered crude by as
much as 5%, prices have since retreated and are hovering around
levels from before the OPEC+ agreement. Prices have come down more
than 30% from four-year highs reached at the start of October.
"The truth of the matter is that fresh OPEC+ cuts will not go
far enough to overturn the incumbent supply surplus," said Stephen
Brennock, analyst at brokerage PVM Oil Associates Ltd.
"Accordingly, oversupply concerns will continue to stifle buying
pressures."
Hedge funds and other speculative investors have pushed net bets
on higher U.S. crude prices to their lowest level since August
2016, according to Commodity Futures Trading Commission figures.
Speculative interest in Brent has also been tepid, analysts
say.
"This limited amount of spec buying clearly indicates that
speculators were left underwhelmed following the OPEC+ meeting on
the 7th of December," according to Warren Patterson, commodities
strategist at ING Bank.
AHEAD
The U.S. Energy Information Administration Monday is slated to
release its monthly drilling productivity report. The agency will
also release weekly U.S. oil-inventory data Wednesday.
Write to Christopher Alessi at christopher.alessi@wsj.com and
Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
December 17, 2018 10:46 ET (15:46 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.