LONDON—Crude oil prices moved higher on Wednesday as
investors bought back into the market after a five-day slide.
Oil prices had slumped more than 3% on Tuesday after a surprise
surge in the value of the dollar due to strong construction data in
the U.S. and the European Central Bank reaffirming its economic
stimulus program, which hit the euro.
"Currency effects on crude oil tend to only have immediate
effects on crude prices," said Daniel Ang, investment analyst at
Phillip Futures in Singapore. "However, in the longer run, we rely
on supply and demand. Therefore, for the rest of today, we expect
some price adjustments for both WTI and Brent before U.S. inventory
data."
July contracts for Brent crude, the global benchmark, were up
$0.8, or 1.2%, at $64.82 a barrel on the ICE Futures Europe
exchange. Light, sweet crude for July delivery was up or 0.9% at
$58.55 a barrel on the New York Mercantile Exchange.
Mr. Ang said he expects weekly U.S. inventory data, to be
released from the U.S. Energy Information Administration later
Wednesday, to show a decline in production.
Harry Tchilinguirian, head of commodity strategy at BNP Paribas,
said U.S. oil supply is quite resilient and producers can be
profitable even at the current oil prices.
"Once you get to $60 a barrel, production is possible, and there
is a lot of hedging going on," he told attendees at the Platts
Global Crude Oil Summit. The U.S. has often been called the new
swing producer on the global market as its output continues to
rise. But the U.S. ban on crude exports makes it hard to be a true
swing producer, said Mr. Tchilinguirian.
Meanwhile, analysts at JBC Energy said the recent data showing
Saudi Arabian crude exports were close to a 10-year high in March
shouldn't lead to the assumption the kingdom will continue to
prioritize exports. The surge came even as Saudi Arabia's own
domestic consumption fell, so to keep exports stable at March
levels would need Saudi Arabia to cut back on its own consumption,
they said.
As temperatures soar for summer and Saudis turn up their air
conditioning, domestic demand should rise, said JBC Energy's team.
Ramping up production even further "seems unlikely given the
already historically strong March supply figure," they say. "We
therefore expect to see a dip in crude export levels in the months
to come."
Gasoline futures recently were up 1.3% to $2.0208 a gallon.
Nymex diesel futures were up 1% at $1.9475 a gallon.
Georgi Kantchev contributed to this article.
Write to Matthew Cowley at matthew.cowley@wsj.com
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