Economy

Oil hits two-week high on share market recovery, Middle East tensions

Oil hits two-week high on share market recovery, Middle East tensions

OPEC's biggest producer, which has cut output since previous year under an agreement between OPEC and other producers to ease a supply glut, pumped 9.980 million bpd of oil in December, according to the data from the Joint Organizations Data Initiative (JODI). A stronger dollar on Tuesday saw most commodity prices - which are denominated in the U.S. currency - fall.

Brent's shortcomings was mainly due to the fall in Asian shares and a rising greenback potentially holding back demand given their ability to raise fuel cost for countries using other currencies domestically.

"Oil got mild support from gains in Asian equity markets, but has been getting pressure from the rise in US rig count and a slight recovery in the dollar".

US West Texas Intermediate (WTI) crude futures were at $61.37 a barrel at 0144 GMT, down 42 cents, or 0.7 per cent, from their last settlement.

Brent, the global benchmark, has seen its premium pricing over WTI - known as the spread - wither in recent weeks.

The US dollar is now trading at its lowest level in more than three years having lost two and a half per cent of its value against other currencies this year, pushing up the price of commodities including gold.

More news: South Korea, US to hold joint military exercises after PyeongChang 2018

But soaring United States production is threatening to erode Opec's efforts.

According to the calculations of the Energy Information Administration (EIA), weekly production of raw materials in the US rose to a historic high of 10.27 million barrels per day for the week by February 9.

The American Petroleum Institute (API) is set to state its forecast regarding the USA crude supply on Wednesday. Saudi Arabia told OPEC that it pumped 9.983 million bpd in January.

Oil is struggling to regain the highs of January after a sell-off in global equities seeped into crude markets earlier this month. The dollar was trading at 107.15 yen, up 0.53 percent. This made WTI futures extend their gains well above $60 per barrel levels and the counter is now up 1.28% at $62.35 per barrel. The VIX volatility index was up 21 percent in advance of the US open.

So far this year North American gold investors have the led the charge with funds adding 21.5 tonnes worth $940m during the month or three-quarters of the global total.


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