Saturday, 21 March 2015 01:11
NEW YORK: Oil prices jumped on Friday, with US crude up about 4 percent, after the dollar fell on interest-rate uncertainty, lifting demand for dollar-denominated commodities from holders of other currencies.
Benchmark Brent oil was on track to end two straight weeks of losses while US crude was headed for its first positive week in five.
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Iran’s struggle to reach a nuclear deal with world powers supported oil prices, since it looked as if sanctions on its oil exports would continue.
The impending expiry of the front-month April contract in US crude added momentum. Traders and investors tried to narrow the price difference between that and the nearby May contract, which will become US crude’s front-month from Monday.
“In our view, today’s strength is paper market tightness, unrelated to the physical market,” Tim Evans, energy futures specialist in New York for Citi Futures said, referring to the general view that there was too much oil in the world.
Brent’s front-month May contract was up 42 cents at $ 54.85 a barrel at 1:48 p.m. EDT (1722 GMT). The contract is set for a 1 percent gain on the week after two weeks of declines.
US crude’s April contract rose $ 1.63 to $ 45.59 a barrel. Its discount to the nearby May was at below 90 cents from an earlier high above $ 1.80 on Friday.
Brent’s premium over US crude was at around $ 8 a barrel.
But technical analysts said the spread, one of the biggest volume trades in the oil market, could eventually blow out to above $ 30.
The dollar was lower as a Federal Reserve statement on Wednesday fed the view that the US central bank is in no hurry to raise interest rates. The euro was up almost 2 percent against the dollar after leaders of Greece and Germany struck a conciliatory note over efforts to keep Greece in the euro zone.
Oil services firm Baker Hughes reported a new four-year low in the number of rigs drilling for oil in the United States. Still, this week’s rig declines were smaller than drops in the past two weeks, and prices barely budged on the data.
Copyright Reuters, 2015
