(Bloomberg) – Oil rose as a weaker dollar offset a government report that showed a smaller-than-expected drop in crude inventories following a viral resurgence.
Futures rose about 1% after falling as low as 2.4% earlier after the United States called on the OPEC + alliance to restart production faster. The dollar weakened, increasing the attractiveness of commodities denominated in the currency, after data showed that consumer prices rose at a more moderate pace in July, reducing concerns about an unwinding of the dollar. part of the stimulus measures.
“The dollar index helps all commodities and it has moved to the negative side of the equation after the data was released today, also helping to support the crude market,” said Bob Yawger, division manager. futures contracts at Mizuho Securities USA.
Prices were under pressure earlier in the session after the United States called on the OPEC + alliance to restart production faster. The world’s largest oil-consuming country has seen gasoline prices well above $ 3 a gallon in recent months, putting pressure on drivers back on the road as pandemic restrictions relax .
The Energy Information Administration report also showed gasoline inventories have declined with great pressure in New York Harbor as well as on the West Coast, although overall demand for fuel has plummeted.
“The weekly report is slightly bearish for near-term oil prices,” said Brian Kessens, portfolio manager at Tortoise Capital Advisors. “We have seen lower than expected crude oil consumption and exports that have fallen short of what we saw 12 months ago. All of this clearly indicates that the delta still has an impact on global demand. “
The coalition agreed last month to restart remaining offline supplies in cautious increments of 400,000 barrels per day each month. The tentative pace appeared to be in line with the market, which has seen prices weaken in recent weeks, with the delta variant causing further bottlenecks in China and other major fuel consumers in Asia.
However, oil prices have not fallen quickly enough to drive retail gasoline down significantly in the United States, which hit a seven-year high this summer and a source of consternation for the White House.
“While the recent OPEC + slowdown has helped stop the rise in crude, for the White House it’s not enough,” said Bob McNally, chairman of Rapidan Energy Group consultants and former White House official. “The Biden administration is under tremendous political pressure due to inflation, with the galloping gasoline being the most publicly visible and the most upsetting.”
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