Oil snaps advance after EIA, dollar’s rise weigh

Oil snaps advance after EIA, dollar’s rise weigh fxcommentOil prices pared some of its earlier gains on Wednesday despite a report showing U.S. crude stocks fell for a seventh consecutive week.

Crude oil futures for August delivery retreated from a peak of $61.79 a barrel to trade around $61.20.

Brent crude also snapped some the gains to trade around $64.85, after touching a high of $65.44.

The prices retreated after the EIA report showed a 2.7 million-barrel decline in U.S. crude supplies in the week ended June 12. Analysts had predicted a 1.6 million-barrel fall.

Refiners are probably taking advantage of the low oil prices to refine as much fuel as possible with the beginning of the summer driving season.

Yet, gasoline supplies edged up by 500,000 barrels and distillate stockpiles soared by 100,000 barrels the previous week, the EIA showed.

The American Petroleum Institute (API) report released late Tuesday showed a drop of 2.9 million barrels in U.S. crude inventories.

It seems that the rise in the U.S. dollar ahead of the Fed’s policy statement has weighed on oil prices, given the inverse relation between the dollar and commodities. The dollar index set a new high of 95.37 after hitting a low of 94.98.

Eyes will focus later in the day on the Fed’s policy statement and the latest growth and inflation projections.

Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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