By Virginia Harrison, MarketWatch
SYDNEY(MarketWatch) — Benchmark crude-oil futures rebounded in electronic trading Thursday, helped by a weaker dollar ahead of an expected interest-rate hike from the European Central Bank later in the day.
Crude for August delivery CL1Q +0.78% added 77 cents, or 0.8%, to $97.42 a barrel on the New York Mercantile Exchange during Asian trading hours.
Attention will turn to Europe later Thursday, when the European Central Bank is widely tipped to raise its policy interest rate, after the People’s Bank of China delivered its third rate rise this year on Wednesday. Read more about the ECB rate decision.
“Although the impact of the Chinese rate move was muted, while reaction to a likely European Central Bank move has yet to be gauged, commodity markets should find it increasingly difficult to push higher against such interest-rate headwinds,” analysts at MF Global said.
The analysts said current oil-price strength is “not indicative of a change in the underlying demand trend, and we likely will see lower prices over July and into August.”
The dollar weakened against the euro ahead of the ECB rate decision, while the dollar index DXY +0.11% , which measures the U.S. unit’s value against a basket of six other major currencies, declined to 75.059 from 75.088 in North American trading late Wednesday. Read more about currencies.
The greenback tends to move inversely to dollar-priced commodities, including crude oil.
Also Thursday, the U.S. Energy Information Administration is due to release its weekly inventory report, and is expected to show a drop in crude stockpiles for the fifth straight week.
Analysts polled by Platts forecast a fall in crude inventories of 2.5 million barrels for the week ended July 1, with a rise in gasoline inventories by 500,000 barrels and distillates inventories rising by 1.1 million barrels.
Natural gas storage is expected to increase by between 78 billion cubic feet and 82 billion cubic feet, according to Platts.
Virginia Harrison is a MarketWatch reporter based in Sydney.
