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Oil Trades Above $65 With Sliding Dollar Aiding Prices


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These translations are done via Google Translate

By Sharon Cho and Alex Longley

(Bloomberg) Oil reversed an earlier decline to trade above $65 as the dollar slipped.Futures in New York bounced between gains and losses on Tuesday, with a deteriorating greenback making commodities priced in the currency more valuable and bond markets rallying. In a bullish indicator for consumption, the OECD revised up its forecasts for global economy on stimulus plans and vaccine efficacy.Oil had started the week strongly — surging to the highest level since October 2018 — after an attack on a major Saudi Arabian crude export terminal, but crude eventually wiped out those earlier gains.

Crude bounces between gains and losses on Tuesday

Oil has rallied this year amid output cuts from Saudi Arabia and OPEC+, and an improving demand outlook with the rollout of Covid-19 vaccines. Prompt timespreads have firmed in a bullish backwardation structure, helping to unwind bloated inventories built up during the coronavirus pandemic, while investment banks continue to raise their crude price forecasts.

The assault on the Saudi terminal appears to have had no impact on shipments, but it’s the latest in a series of incidents amid a rapidly tightening market. U.S. refineries, meanwhile, are resuming operations after the unprecedented cold blast last month and should start consuming more crude, and gasoline demand in California — the biggest American state — is picking up.

“Risk appetite across the commodity space, including oil, look set to ebb and flow with dollar and yield developments,” said Ole Hansen, head of commodities strategy at Saxo Bank.

See also: Saudi Oil Attack Is Nothing Like the Last One: Liam Denning

Prices
  • West Texas Intermediate for April delivery gained 1.1% to $65.77 a barrel at 10:18 a.m. London time after sliding the most in more than a week Monday.
  • Brent for May settlement climbed 1.2% to $69.08

The rally in oil prices is bad for big consumers like India, according to an executive at one of the nation’s biggest refiners. The country would prefer prices to be in the lower end of the $50-$60 a barrel range.

U.S. gasoline and distillate stockpiles — a category that includes diesel — declined last week, according to the median estimate in a Bloomberg survey before government data on Wednesday. Crude inventories, however, expanded for a third week, the poll shows.

“I wouldn’t rule out some more pullback,” said Vandana Hari, the founder of Vanda Insights in Singapore. “A settlement above $69 for Brent, even after the surprising OPEC+ decision, seemed like an over-reaction.”

Other oil-market news:
  • Supertanker Elandra Everest left South Africa’s Saldanha Bay storage terminal on Monday with a full cargo of ~2m bbl of crude and is now heading for Paradip in India.
  • India is preparing to return to its earthen stove and the smoggier fuels after provisions for the liquefied petroleum gas cooking fuel subsidies were halved in the federal budget for the fiscal year ending March 2022.


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