The last month witenessed an increase of oil prices, which exceeded the edge of $70 per barrel, reflecting some, regain of the previous session’s losses associated with the beginning of global economic recovery and a weaker U.S dollar
According to recent data, the U.S crude for November delivery rose for approximately 62 cents to $70.19 a barrel. The contract closed $1.31 lower at $69.57 a barrel. While, London Brent crude gained 62 cents to $67.82.
“A weaker dollar is going to continue to help oil and the latest corporate results are supporting a lot of markets today,” CMC Markets analyst James Hughes told Reuters.
Hughes urged caution over reading too much into positive headline numbers during the corporate earnings season as figures can be enhanced by expenditure reductions rather than increased revenue.
“I am still a little bit skeptical about these results but it looks like investors are going to look through that and are going to accept cost cutting earnings for now.”
The swinging fall of dollar making it weaker supports oil because it makes commodities priced in the greenback cheaper for those holding alternative currencies.
Still, some analysts doubt whether oil will rise beyond the $75 mark, as the market remains well supplied and the global economic recovery, along with energy demand, remains fragile.
The Energy Information Administration (EIA) reported gasoline stocks leapt 2.9 million barrels in mid October, nearly three times the build that analysts had expected.
Distillate stocks, which include diesel and heating oil, rose by 700,000 barrels; more than double the forecast 300,000-barrel build.
“The road to recovery is unlikely to be as smooth as some expect and will come with a few bumps along the way. The hard data [factory orders, capital goods orders] have disappointed relative to the direction suggested by the new orders’ components in the ISM manufacturing surveys,” Harry Tchilinguirian, an oil analyst at BNP Paribas, said.
By Yomna Bassiouni