Oil prices rose today as the US dollar dropped to a six-week low supporting commodities such as oil that are priced in the currency.
The US dollar dropped to a six-week low on Monday compared to other major currencies due to recent weak US economic data, which clouds the pace of monetary tightening, supporting oil futures.
The US manufacturing output, which unexpectedly fell in January, recording its biggest drop in more than four and a half years, has caused some investors to revise their expectations of how soon the Federal Reserve will scale back stimulus and tighten monetary policy.
Crude also received support from supply disruptions and a severe winter across North America, which has boosted demand for heating oil.
Crude prices were weighted down by continued supply concerns in Libya, with oil production dropping to 390,000bpd as protests have partly blocked flows from the El Sharara oilfield.
Former anti-Gaddafi rebel protesters have seized three oil ports in eastern Libya since August, demanding greater regional autonomy and more share in oil wealth, resulting in a drop of oil exports to around 600,000bpd.
The prices also gained support from Chinese data, which showed banks disbursed the highest volume of loans in any month in four years in January, a surge that suggests the world’s second biggest economy may not be cooling as feared.
Further gains in crude futures were limited as refineries take plants down for maintenance.
Investors are waiting for February’s HSBC flash PMI survey of manufacturers’ data, which is scheduled for release on Thursday.
Image: The dollar hits a six-week low on weak US data. Photo: courtesy of Sura Nualpradid.