(Bloomberg) - Oil climbed after failing to break beneath last month’s low as a weakening dollar increased investor appetite for commodities.
Crude advanced 1.8 percent in New York, erasing an early loss. The U.S. currency retreated, bolstering the appeal of raw materials priced in the greenback as an investment. Futures failed to break through the $45.83-a-barrel June low. Government data Thursday will probably show U.S. crude supplies declined last week, according to a Bloomberg survey.
"The market popped after failing to break through key support," said Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida. "The falling dollar and technical support gave the bulls what they needed."
Crude has traded between $45 and $51 a barrel over the past month since almost doubling from a 12-year low in February. The recovery has prompted U.S. producers to begin returning drilling rigs to service, leading to speculation that a decline in output will slow. Riskier assets are retreating after rallying last week on bets central banks will work to stem the impact of the U.K.’s departure from the EU.
West Texas Intermediate crude for August delivery rose 83 cents to close at $47.43 a barrel on the New York Mercantile Exchange. The contract earlier touched $45.92, the lowest since June 27. The total volume traded was 10 percent above the 100-day average.
Brent for September settlement increased 84 cents, or 1.8 percent, to $48.80 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude closed at a 66-cent premium to WTI for the same month.
The Energy Information Administration’s weekly report on U.S. supply and demand will be published Thursday, one day later than usual because of the Independence Day holiday Monday.
U.S. crude inventories probably fell 2.5 million barrels last week, the seventh-straight drop, the Bloomberg survey showed. Stockpiles slipped to 526.6 million barrels, the lowest in three months, in the week ended June 24. Supplies rose to an 87-year high of 543.4 million barrels in the last week of April.
Crude production slipped by 55,000 barrels a day to 8.62 million, the lowest since September 2014, according to EIA data. U.S. output is down 10 percent from 9.61 million barrels a day on June 5, 2015, which was the highest in more than four decades.
"Production declines in the U.S. are accelerating," said Joe Bozoyan, an equity portfolio manager who focuses on energy at John Hancock in Boston. "The drop in U.S. production will eventually win out over demand concerns. I’m still looking for prices to probably trend higher over the next year."
More than 660 well-service workers could go on strike starting Thursday if the Norwegian Oil & Gas Association and the Safe union fail to find an agreement in state-backed mediation on Wednesday. A walkout wouldn’t have any immediate impact on oil and gas production, according to the association. In a separate series of negotiations, the Norwegian association late Tuesday left talks with the Industry Energy union on a wage agreement covering more than 6,000 oil-service workers.
The discussions haven’t formally broken down and could resume later, the employers’ group said. Nigeria’s Pengassan oil union said it expects a strike involving more than 2,000 members will proceed as planned on Thursday. Chinese fuel exports will remain high this summer as domestic consumption is curbed by damaged roads and pipelines from rains and floods, JPMorgan Chase & Co. said in a report.
- With assistance from Mikael Holter and Grant Smith. To contact the reporter on this story: Mark Shenk in New York at firstname.lastname@example.org To contact the editors responsible for this story: David Marino at email@example.com Carlos Caminada, Anne Riley
Copyright 2017 Bloomberg News.
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