Close  

Oil rises on US stockpile drop, weaker dollar

/ 01:43 PM September 22, 2016
Economy Manufacturing

AP FILE PHOTO

SINGAPORE, Singapore—Oil prices climbed Thursday, building on the previous day’s gains following a bigger-than-forecast fall in US stockpiles, and a plunge in the dollar after the Federal Reserve kept interest rates on hold.

The commodity rallied Wednesday after the US Department of Energy said inventories had tumbled by more than six million barrels last week, almost twice as much as expected, indicating a pick-up in demand in the world’s top economy.

ADVERTISEMENT

“This drop is expected to alleviate glut concerns and will further support the crude oil prices,” CMC Markets market analyst Margaret Yang wrote in a note.

At about 0300 GMT, the US benchmark West Texas Intermediate was up 45 cents to $45.79, while Brent added 48 cents to $47.31. Both contracts climbed more than two percent Wednesday.

The gains were given extra momentum by the a weaker dollar, which makes oil cheaper for people holding other currencies.

The greenback tumbled after the Fed said the US economy was improving and the argument for an interest rate rise was strengthening but more evidence of sustained progress was needed before any action was taken.

While broadly expected the decision to hold borrowing costs at ultra-low levels was cheered across global markets, sending equities and higher-yielding currencies soaring.

News that oil giants Saudi Arabia, Iran and Qatar met at OPEC headquarters in Vienna to discuss production cuts ahead of next week’s informal producers’ meeting in Algeria also provided strong support to the crude rally.

OPEC and non-OPEC member states are due discuss in Algiers a global supply glut and overproduction that have hammered prices for more than two years, sending them to near 13-year lows at the start of 2016.

Previous efforts in April for a production cap fell apart after OPEC member Iran—which had just come out from years of Western nuclear-linked sanctions—refused to take part.

RELATED STORIES

ADVERTISEMENT

Oil prices drop as Libya moves to boost exports

Oil prices dive on bearish US inventory report

Read Next
LATEST STORIES
MOST READ
Don't miss out on the latest news and information.
View comments

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.

TAGS: Commodities, oil, world
For feedback, complaints, or inquiries, contact us.


© Copyright 1997-2019 INQUIRER.net | All Rights Reserved

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.