LONDON: Oil prices hit $60 a barrel on Tuesday for the first time in six months, boosted partly by a weak dollar and gains on equity markets.
But prices retreated from their highs when US equity markets turned negative. US crude was up 53 cents at $59.03 a barrel by 1432 GMT. It earlier touched $60.08 a barrel, its highest since November last year. It has risen about 20 per cent this month. London Brent crude was up 64 cents at $58.12 a barrel. The US dollar fell to a four-month low as optimism about the economic climate reduced its appeal as a safe haven. Oil, which is priced in dollars, tends to rise when the dollar falls.
Gains in equity markets have also driven oil higher, with oil and equities being closely correlated since equity markets bounced in April. “Oil is riding the coat-tails of the equity market bounce for now, largely ignoring the build-up in oil inventories,” said Harry Tchilinguirian, senior oil analyst at BNP Paribas.
“Weakness in oil fundamentals is reflected in elevated inventories, yet the market’s price assessment appears to have brushed this aside.” The global economic downturn has hit demand for oil, which has created a massive supply overhang.
There is an estimated 100 million barrels of crude oil stored at sea on tankers. US crude inventories are at their highest in 19 years.
