Oil prices up on weak dollar, hopes of Greek talks progress

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Oil prices gained on Thursday, supported by a weakening U.S. dollar, continuing Middle East geopolitical tensions and hopes of progress in talks between Greece and its international creditors.

U.S. July crude CLc1 gained 1 cent to $59.93 a barrel as of 0749 GMT(3.49a.m. ET) after falling 5 cents in the previous session.

Brent August crude LCOc1 gained 35 cents to $64.22 a barrel after it settled 17 cents higher on Wednesday at $63.87. 

After the Federal Reserve signalled it may wait until late this year to raise interest rates, the U.S. dollar slid while Wall Street stocks rose in volatile trading. Asian equities also rose early on Thursday. [MKTS/GLOB]

“Oil prices were revived by a weakening USD as a result of a bearish FOMC,” Phillip Futures said. “Since we expect the FOMC meeting to be the main card this week, we believe that prices should move sideways for the rest of the week.”

German Chancellor Angela Merkel said on Thursday that it was still possible for Greece to reach an agreement with its international creditors – the European Union, International Monetary Fund and European Central Bank.

Oil prices declined earlier on Thursday after data from the U.S. Energy Information Administration (EIA) showed gasoline stocks USOILG=ECI rose by 460,000 barrels, beating analysts’ expectations for a 314,000-barrel drop, according to a Reuters poll. [EIA/S]

The EIA report also showed that operating capacity at U.S. refineries fell to 93.1 percent last week from 94.6 percent.

“Expectations were for an increase … the reaction to this (inventory) data shows that the reasoning behind such price support is fragile,” ANZ bank said in a report.

Credit Suisse said the US rig count has continued to fall but US output has not ‘rolled-over.’

“As long as US production promptly declines from here, the current level is broadly supportable, given improving demand fundamentals. But failure to do so could bring a second temporary correction, which would then be followed by a fundamentally-supported price increase toward year-end.”

Prices were also supported by continuing conflicts in the Middle East.

Islamic State killed five policemen in a town near Iraq’s biggest refinery, in an attack that may help ease pressure on some of its fighters trapped in the strategically important facility, a security official said.

In the United States, tropical depression Bill drenched large parts of Texas on Wednesday, but oilfields in the Gulf of Mexico and near the coast were unaffected. Refineries also ran normally.

 

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