It has just been announced that the oil prices are on the rise and this is driven by a weakening dollar. However, the gains were covered by plentiful supplies and inventories even with the effort (which was centered on cutting output and prop up the market) made by Opec as well as other producers.
The international benchmark for oil prices –Brent crude futures – were trading at $55.56 (Dh204) per barrel at 0801 GMT, up 48 cents, or 0.87 per cent, from their last close.
While in the US, West Texas Intermediate (WTI) crude futures were at $53.19 a barrel, up 43 cents, or 0.82 per cent.
Traders however said that the gains (which has recently been seen) was as a result of a weakening dollar. From the start of 2017, it has lost 3.9 per cent in value. We know that oil is traded in dollar and a cheaper greenback makes fuel purchases less costly for countries using other currencies as a medium of exchange.
Energy Information Administration (EIA), showed an increase of 2.84 million barrels in commercial crude inventories to 488.3 million barrels. This add to a 6.3 per cent rise in US oil production since the middle of last year to 8.96 million barrels per day (bpd).
“EIA estimates that crude oil and other liquids inventories grew by 2 million barrels per day in the fourth quarter of 2016, driven by an increase in production and a significant, but seasonal, drop in consumption”, the agency said.