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Oil prices rose on Tuesday amid a depreciating US dollar and expectations for a drop in US crude inventories. Analysts expect that oil and distillate stocks declined last week, while gasoline stocks rose. At the same time, oil gains are capped by negative news about a spike in COVID-19 cases in India, the third largest importer and consumer of oil. At the time of writing, Brent oil futures crude rose by 0.95% to $67.69 per barrel, while WTI futures went up by 0.87% to $63.52 per barrel.
Today and yesterday, the US dollar has been trading at its lowest level in six weeks against other major currencies. The greenback sell-off was triggered by last week's decline in US Treasury yields. The Fed's statement that any surge in inflation will not be long-term drove the yields of the US government bonds to a five-week low. A significant depreciation of the US currency favors the rise in commodity prices. The fact is that buyers who use other currencies pay much less for oil that is denominated in US dollars when the latter falls in value. Even the existing concerns about fuel demand in some regions cannot affect this rule.
In addition, oil exports from Libya are expected to reduce by 280,000 barrels per day, that is, to a level below 1 million barrels per day for the first time since October. This situation evolved due to force majeure with deliveries from the port of Hariga on Monday. Libyan Oil Company National Oil Corp. said it could extend these measures to other facilities due to the disagreement with the country's central bank.
Oil quotes are also supported by reports that OPEC and allies are discussing the possibility of holding just a meeting of its monitoring committee on April 28 instead of a general meeting of the organization. Moreover, representatives of the committee told Bloomberg that no changes are expected to the planned increase in oil output. Actually, the oil market has already priced in a slight uptick in the OPEC+ production.
On Wednesday, April 21, the US will release weekly data on oil inventories. Experts predict that oil stockpiles may well decline for the fourth week in a row, this time by 2.8 million barrels. On Tuesday night, the American Petroleum Institute (API) will publish its estimates of crude inventories, while the report from the US Department of Energy will be released on Wednesday.
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