Crude oil futures prices crept up 0.5% Tuesday and hit a one-week high, prodded by the dollar's decline.
The euro rose against the U.S. currency after the Group of Seven industrial nations pledged not to engage in currency devaluations. The declaration eased investor fears that the European Central Bank would react to recent euro strength with monetary easing measures that would depreciate the single currency, traders and analysts said.
Dollar-denominated crude futures become more attractive to buyers in other currencies when the U.S. currency loses value. "The strength of the euro has kept oil prices up today," said Carl Larry, analyst at Oil Outlooks & Opinions.
Sweet, light crude for March delivery settled 48 cents, or 0.5%, higher at $97.51 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 53 cents higher at $118.66 a barrel.
Also giving oil prices a lift, the Organization of the Petroleum Exporting Countries said it expects demand for its oil to be 100,000 barrels higher per day than it estimated a month ago, with total demand for OPEC oil projected at an average of 29.8 million barrels a day in 2013.
However, U.S. demand for oil is still seen to hover at weak levels this year. The U.S. Energy Information Administration said in its monthly Short-Term Energy Outlook Tuesday that U.S. oil demand dropped to a 16-year low in 2012 and is expected to rise only marginally through 2014.
Traders will be paying close attention to a weekly government survey from the Energy Information Administration, which is due to be released Wednesday. Analysts polled by Dow Jones Newswires expect the data to show crude-oil stockpiles rose by 2.3 million barrels last week as refiners continued to shut down for maintenance.
Another rise in weekly oil stockpiles would mark the fourth consecutive week of inventory increases, the longest streak since May, says Bob Yawger, director of energy futures at Mizuho. Rising supplies would slow down the rally in oil prices this week, he adds.
The International Energy Agency, based in Paris, also releases its monthly forecasts for global oil demand and supply this year on Wednesday.
Front-month March reformulated gasoline blendstock, or RBOB, settled 2.91 cents, or 1%, higher to $3.0503 a gallon. March heating oil settled 0.5 cent, or 0.2%, higher to $3.2362 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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