In this file photo taken with a long exposure, a pumping unit sucks oil from the ground near Greensburg, Kansas. AP
NEW YORK, United States – A sharp fall in the dollar on improved Eurozone economic data sent New York oil prices to fresh 2015 highs Tuesday, even as officials at OPEC defended their generous output strategy.
US benchmark West Texas Intermediate for July delivery added $1.06 to $61.26 per barrel in New York trading.
In London, Brent crude for July rose 61 cents to $65.49.
The dollar lost more than 2 percent against the euro, and 0.5 percent on the yen, after European inflation came in at 0.3 percent in May, better than expected and diminishing fears of deflation.
“I think the biggest thing is the dollar. There is a very strong inverse correlation with oil prices. So whatever moves the dollar lower could move the crude market higher,” said Kyle Cooper of IAF Advisors.
The surge came despite still little change in the global crude oversupply situation.
Officials of the Organization of the Petroleum Exporting Countries (OPEC) suggested they will stick to current output levels when they meet on the market situation in Vienna Friday.
Led by Saudi Arabia, OPEC has met the plunge in prices over the past year with increased production, in what some believe is a strategy to drive high-cost producers, especially fracking-based producers in the United States, out of the market.
Asked if OPEC’s strategy was working, Saudi Oil Minister Ali al-Naimi told reporters in Vienna on Monday: “The answer is yes… Demand is picking up. Supply is slowing. This is a fact. The market is stabilizing.”
“You can see that I am not stressed, that I am happy,” he added.
Cooper said traders are also expecting that the weekly US oil market report on Wednesday will show more signs of tightening, of higher demand and lower output, which would support higher prices.