(Bloomberg) – Oil took a breather from its week-long rout as the dollar’s rally faltered and concerns over higher OPEC production eased.
Futures in New York advanced 2.2 percent on Wednesday, the most in three weeks, after losing almost 8 percent in five sessions. The greenback, whose rise since mid-April threatens to take the shine off commodities, declined. Meanwhile, traders are coming to terms with signs Saudi Arabia and Russia may dial back their output cuts as exports from Venezuela and Iran are set to decline and OPEC sees the market back in balance.
“The question about production cuts is the hammer that really drove the market lower,” said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut. “Unless we get signs that more oil is going to come onto the market than initially figured, we’ll probably stabilize here.”
Persuading their allies to change tack and boost output before an end-June meeting in Vienna means Saudi Arabia and Russia have a difficult month ahead, according to Nordine Ait-Laoussine, president of Geneva-based consultant Nalcosa and former energy minister of Algeria. A weekend meeting between producers including Saudi Arabia and Kuwait may bring more clarity.
“What we’ve seen is a bit of liquidation of longs a few days ago. The market oversold,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. “Our position continues to be OPEC will try to compensate for any losses from Venezuela and potentially Iran, and above all, it will try to keep stability in the market.”
Oil prices barely budged from the settlement after the industry-funded American Petroleum Institute was said to report crude inventories rose 1 million barrels last week, while distillate supplies climbed 1.47 million barrels. A build in distillates would be the first since late March if Energy Information Administration data on Thursday confirms it.
Crude stockpiles are forecast to have risen 450,000 barrels last week, according to a Bloomberg survey of analysts ahead of the government report.
West Texas Intermediate crude for July delivery traded at $68.23 a barrel at 4:43 p.m. after settling at $68.21 a barrel on the New York Mercantile Exchange.
Brent futures for July settlement rose $2.11 to end the session at $77.50 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded $9.29 higher than WTI.
The Bloomberg Dollar Spot Index fell as much as 0.7 percent, bolstering the appeal of commodities traded in the U.S. currency, such as oil.
China said it will hit back at the U.S. plan to move ahead with tariffs on $50 billion of Chinese imports, after the White House announced Tuesday that a final list of imported goods to be targeted will be released by June 15, and levies imposed “shortly thereafter.”
Other oil-market news:
Gasoline futures added 1.9 percent to settle at $2.1842 a gallon. Exxon Mobil Corp.’s Darren Woods sees his company at the center of a delicate balancing act between the wishes of those who want a cleaner environment and those seeking continued economic growth. India’s Reliance Industries is planning to halt Iran oil imports from October through November, Reuters reported, citing two unidentified people familiar.
With assistance from Tsuyoshi Inajima, Sharon Cho and Alex Longley. To contact the reporter on this story: Jessica Summers in New York at firstname.lastname@example.org. To contact the editors responsible for this story: Pratish Narayanan at email@example.com Reg Gale.