(New York) Oil prices ended higher on Tuesday, still at high levels after some OPEC members announced production cuts last week and helped by a weaker dollar.
A barrel of Brent North Sea oil for June delivery gained 1.69% to $85.61.
Its US equivalent, a barrel of West Texas Intermediate (WTI), for May delivery, climbed 2.24% to $81.53.
“The dollar was quite weak today which prompted speculative buying,” as crude oil trades in dollars, it becomes less expensive when the U.S. currency weakens, said Andrew Lebow of Commodity Research Group.
Around 3:20 p.m. (Eastern time), the greenback dropped half a percentage point against the euro and 0.38% for the Dollar Index, which compares it to a basket of other currencies.
CBA analysts said prices remained “firmly above $80 a barrel following OPEC’s (Organization of the Petroleum Exporting Countries) surprise announcement on April 2 to further cut production until ‘at the end of the year 2023’.
The production cuts of eight group members along with those announced by Russia are expected to deprive the market of around 1.6 million barrels of crude per day from May, and until the end of 2023.
The news prompted a jump of $5 per barrel in the two global crude benchmarks.
As markets awaited the US inflation figure on Wednesday, Edward Moya of Oanda, an analyst at Oanda, warned that if the consumer price index “continues to rise, then the level of $85 per barrel of US WTI will offer little resistance.”
Analysts, however, are betting on inflation, measured by the CPI index, of 5.1% in March over one year, down from the 6% recorded over twelve months in February.
Finally, brokers would watch the status of weekly US crude stocks on Wednesday. Analysts’ forecasts are betting on a reduction in these reserves.
“This week’s data on US inventory levels is expected to show a decline in the world’s biggest consumer country,” Energi Danmark analysts say.
