The US dollar dropped to its lowest in nearly two years against a basket of six other major currencies on back of a surge in US virus cases
MELBOURNE: Oil prices rose for a third straight day on Tuesday, buoyed by support for demand coming from efforts to stimulate the U.S. economy’s recovery from the coronavirus crisis and a weakening of the dollar that makes crude cheaper for global buyers.
Brent crude futures climbed 35 cents, or 0.8%, to $43.76 a barrel at 0118 GMT, adding to a 0.2% gain on Monday.
U.S. West Texas Intermediate (WTI) crude futures gained 27 cents, or 0.7%, to $41.87 a barrel, building on a 0.75% rise on Monday.
U.S. Senate Republicans on Monday proposed a $1 trillion coronavirus aid package worked out with the White House to revitalise the economy with expanded unemployment benefits for millions due to expire this week, although Democrats urged more support.
Further aiding the stimulus, the U.S. Federal Reserve’s policy-setting panel meets on Tuesday and Wednesday, where it is expected to reiterate it will keep interest rates near zero for years to come.
“Oil prices will continue to draw support from the Fed’s dovish policy, which sees the U.S. dollar move lower,” AxiCorp market strategist Stephen Innes said in a note.
The U.S. dollar dropped to its lowest in nearly two years against a basket of six other major currencies on the back of a surge in U.S. coronavirus cases. Florida and California have now both overtaken the previous epicentre, New York.
“For oil prices to break out higher, there must be a significant flattening of the U.S. Sunbelt COVID-19 case count curve at a minimum,” Innes said.
Traders will be watching out for U.S. inventory data due from the American Petroleum Institute industry group later on Tuesday and the government on Wednesday. Refined products stockpiles are expected to have declined last week, while crude oil stockpiles are expected to have held steady, five analysts polled by Reuters estimated.
On the down side for fuel demand, Europe’s largest low-cost airline, Ryanair, on Monday cut its annual passenger target by a quarter after bookings were hit in recent days, and warned a second wave of COVID-19 infections could lower that further.