MW: Crude prices higher as a weak dollar lends support
Crude oil prices advanced on Friday, as U.S. dollar weakness lent some support to prices despite fundamentals remaining weak.
Light, sweet crude futures for delivery in March CLH6, +0.91% rose 36 cents, or 1.1%, to $32.08 a barrel on the New York Mercantile Exchange. April Brent crude LCOJ6, +0.44% on London’s ICE Futures exchange gained 21 cents, or 0.6%, to $34.67 a barrel.
“Oil prices for the day will really depend on whether the dollar continues to weaken,” said Daniel Ang, an investment analyst at Phillip Futures, adding that U.S. nonfarm payroll data due Friday will determine the currency’s strength.
The U.S. Dollar Index has already dropped toward 96.5. Should nonfarm payrolls turn out lower than expected, the U.S. Dollar Index could fall further,” he said. The index DXY, +0.08% hit 97.5 a day ago.
Recent weakness in the dollar has also supported other commodities priced in the currency, making imports cheaper for several consuming countries, including China.
Still, oil’s fundamentals remain weak due to a supply overhang, as major producers have refused to cut output despite prices falling sharply for nearly two years.
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“The battle for market share continues to intensify between Organization of Petroleum Exporting Countries producers,” said an ANZ report.
“In a recent move, Saudi Arabia, the world’s largest crude exporter, cut prices for March sales of its light crude-oil grades to Asia. Rising Iran oil exports are also increasingly targeting sales to Asian buyers,” the report said.
Oil prices were swayed recently by speculation of a collective output cut by several oil-producing nations, including some in OPEC.
Higher crude-oil inventories in the U.S. have also hurt prices, though a weaker dollar has largely softened the blow this week.
