Oil rose 2% in the fall in US crude, a weaker dollar for Reuters

Author: Jessica Resnick-Ault

NEW YORK (Reuters) – Oil prices hit a two-month high on Wednesday as a tight supply led the U.S., the world’s largest consumer, to drop crude inventories from a low of 2018, easing weaker dollars and easing concerns for the Omicron coronavirus variant.

stocks fell 4.6 million barrels last week to 413.3 million barrels, the lowest since October 2018, the Energy Information Administration said. Analysts predict a 1.9 million barrels drop in a Reuters poll.

“The gross draw was higher than expected despite declining refining activity,” said Matt Smith, chief oil analyst at Kpler data company in the United States.

futures rose $ 1.26 or 1.5% to $ 84.99 a barrel at 12:21 EST (1721 GMT). US West Texas Intermediate (WTI) gross futures rose $ 1.61 or 2% to $ 82.81.

The fall in the dollar was the main driver of the rise in oil prices, even surpassing the EIA draw, Kpler Smith said. A weaker greenback makes dollar-denominated oil contracts cheaper for other currency holders.

The dollar fell in a two-month low against a basket of currencies after data showed strong US consumer prices rose in December. [USD/]

Brent’s contract was in decline, with delivery of $ 4.41 more expensive than the previous month’s six-month delivery, indicating a tight supply in the near term.

U.S. crude inventories have been falling for seven consecutive weeks, and overall inventories have narrowed worldwide as major producers struggle to increase supply, despite rising demand, despite rising Omicron cases.

OPEC + producers, which includes the Organization of the Petroleum Exporting Countries and its allies, continue to hold more than 3 million barrels (bpd) a day, while Iranian exports continue to face US sanctions.

Although OPEC + is raising its production targets every month, technical difficulties have prevented several countries from meeting their quotas.

U.S. Federal Reserve Chairman Jerome Powell said Tuesday that the U.S. economy should cope with the current COVID-19 rise with a “short-term” impact and is ready to start a tougher monetary policy.

“Assuming that China is not suffering from a sharp slowdown, that Omicron is really becoming Omi-goan, and that OPEC + ‘s ability to raise production is clearly limited, I don’t see any reason why gross Brent can’t move to $ 100 in the first quarter, maybe sooner.” , said Oanda analysts. Jeffrey Halley.

“There are a lot of changing results in the previous sentence, the biggest threat is Omicron in China, India and Indonesia.”