Oil Gains on Weak Dollar
(Bloomberg) -- Oil rose to trade near $43 a barrel in New York with support from a weaker dollar, while U.S. crude stockpiles are expected to fall further.
Futures added 1.2% after the U.S. currency extended losses to the lowest level since May 2018, making commodities priced in the dollar more appealing. Crude inventories fell by 2 million barrels last week for a sixth weekly draw, according to a Bloomberg survey, which would be the longest run of declines this year. Meanwhile, AstraZeneca Plc has started a large-scale human trial of its coronavirus vaccine in the U.S. as many major economies struggle to contain the outbreak that has hit oil and fuel demand.
Oil capped a fourth monthly gain in August but has struggled to make a convincing push above $43 a barrel as rising coronavirus infections raised concerns about sustained demand. However, the biggest producer in the United Arab Emirates signaled it may slash output in October to meet the country’s target under a global production-cuts deal, helping to ease a global glut.
“The market is playing a wait-and-see approach,” said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. “With some indicators showing that demand recovery is waning and supply is picking up, prices may move in a downward trend in the next couple of months.”
U.S. gasoline stockpiles fell by 3.55 million barrels last week, according to the survey. That would be a fourth weekly draw if confirmed by Energy Information Administration data on Wednesday. Industry figures are due Tuesday.
However, demand concerns still linger. Virus cases in the U.S. topped 6 million, while Covid-19 fatalities in India surpassed Mexico’s, giving it the third-largest death toll globally. The headwinds may force top crude exporter Saudi Aramco to slash the price of its flagship Arab Light crude by $1 a barrel for October sales to Asian customers as refiners struggle to make profits.
© 2020 Bloomberg L.P.
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