Oil prices have increased as investors’ shift into risk assets amid a weakening US dollar that fell to multi-year lows.
Brent crude oil futures rose by $0.49 or 1.1% to $45.77 a barrel while US West Texas Intermediate (WTI) crude futures increased by $0.37 or 0.9% to touch at $42.98 a barrel, Reuters reported.
Both Brent and WTI benchmarks fell about 1% on 31 August due to oversupply concerns, with global fuel demand falling below pre-pandemic levels.
The US dollar was last down 0.04% standing at 92.146 against other overseas currencies, after hitting its lowest since May 2018.
Australian exchange-traded funds provider BetaShares chief investment officer Louis Crous was quoted by the news agency as stating: “It (the policy shift) really cements the fact that you’re looking at negative real rates for the US, which will not be great for the US dollar. That’s good for commodities.”
ANZ Research said in a note: “This has created plenty of uncertainty about whether demand for transportation fuels will ever return to normal.”
Analysts expected a fall in the US crude stocks by around two million barrels in the week that ended on 28 August, according to a Reuters poll.
This data has been released ahead of the data from the industry group American Petroleum Institute (API).
Six analysts polled by Reuters estimated drop in gasoline inventories by 3.6 million barrels, while distillate inventories are expected to fall by 1.5 million barrels.